Improvement in China’s Lending Data: Has Credit Demand Really Revived?

Source link: Improvement in China’s Lending Data: Has Credit Demand Really Revived? At a Glance: China’s new bank loans rose to 1.08 trillion yuan in September. New lending in the first nine months of 2026 fell 22% compared with the same period last year. Weak loan demand from households and businesses is still described as the main challenge. China’s new bank loans in September reached 1.08 trillion […] Source site: Safir Arjan

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China's new bank loans reached 1.08 trillion yuan in September, beating market forecasts of 975 billion yuan. At first glance, this increase looks like a welcome improvement, especially after the rather disappointing lending numbers of the past few months. However, the amount of lending is still about 16% lower than in September last year. In addition, the overall picture from the beginning of the year is not very encouraging.

In the first nine months of 2026, Chinese banks disbursed a total of 11.52 trillion yuan of new loans. This figure is lower than 14.75 trillion yuan in the same period last year. In other words, new lending has decreased by 22% this year.

In my opinion, this statistic gives us a lot of information about the state of China's domestic economy.

China's current problem is not that banks are unwilling to lend; The problem is that households and businesses are not very eager to get loans to begin with.

A large part of this situation can be attributed to the collapse of the real estate market in 2021. As the problems in the real estate sector continue, households have little incentive to take out new mortgages. Meanwhile, when domestic consumption remains weak, businesses are also not in a hurry to expand their operations.

Even the People's Bank of China (PBOC) has already acknowledged that slower lending growth may become the new normal; Because the reduction in borrowing in the real estate sector and local government financing institutions overshadows the demand from emerging industries.

Therefore, not much should be taken from the improvement in the September lending figure. China's credit recovery still faces many difficulties.

Beijing could reduce the cost of borrowing and encourage banks to lend. But convincing households and businesses to take on more debt is an entirely different matter.