China Credit Growth Misses Forecasts, Demand Sags

China’s banks reported 60 billion yuan in new yuan loans for August, the clearest figure in the data. That total rebounded from a record 340 billion yuan contraction in July yet missed the 400 billion yuan level forecast by economists in a Reuters poll. Outstanding yuan-loan growth slowed to a record-low 4.9 percent year-on-year, and new lending across the first eight months fell roughly 19 percent from a year earlier. Total social financing, a broad measure of funds reaching the real economy that includes bank loans, trust and entrusted loans, undiscounted bankers’ acceptances, corporate bonds, new equity and government bonds while excluding interbank lending, rose to 1.66 trillion yuan in August from 1.41 trillion yuan in July. About 1.2 trillion yuan of government bond sales in July were the main reason total social financing increased even as new yuan loans contracted by 340 billion yuan. The People’s Bank of China started folding local government special bonds into the measure in 2018 and later expanded it to ordinary government bond issuance. Direct financing through bonds and equity overtook bank loans as the largest slice of new financing in 2025 for the first time. New bank loans also contracted in April; before this year the new-loans gauge had contracted only twice in two decades. The central bank has kept loan prime rates unchanged for 15 consecutive months at record lows.