(18 August 2026 – China) China’s bank lending contracted by a record RMB340 billion (US$50.4 billion) in July as corporate and consumer borrowing declined sharply according to the People’s Bank of China (PBoC).
PBoC data released last week revealed new Renminbi (RMB) bank lending decreased by a record RMB340 billion (US$50.4 billion) in July, compared with an increase of RMB1.61 trillion (US$238.7 billion) in June.
Corporate loans by RMB130 billion (US$19.3 billion) and household loans fell by RMB460.3 billion (US$68.2 billion) with lending to non-bank financial institutions and movements in other categories partly offsetting these declines. New loans totalled RMB10.38 trillion (US$1.54 trillion) in the first seven months of 2026, down from RMB12.87 trillion (US$1.91 trillion) year-on-year (YOY).
July is a weaker month following quarter-end lending in June, but the contraction was substantially below economists’ expectations for a modest increase. The PBoC has encouraged greater use of total social financing, which includes bonds and equity financing, when assessing credit conditions.
Outstanding total social financing (a broad measure of credit and liquidity) increased by 7.4 percent in July YOY but was unchanged from June. Any acceleration in government bond issuance could boost such financing.
“This weakness in loan demand comes despite the fact that nominal bank lending rates have continued to edge down. The recent uptick in inflation means that, in real terms, bank lending rates have fallen sharply this year. The PBoC doesn’t seem particularly worried about the recent weakness in the credit data” Capital Economics stated in a research note.