China’s Credit Growth Slows in October as Borrowing Demand Falters
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China’s credit expansion came in well below expectations in October, with key indicators for new lending and aggregate financing sharply missing market forecasts — a sign that subdued domestic demand remains a major drag on the country’s economic momentum.
New yuan-denominated loans totaled 220 billion yuan ($31 billion) last month, down 280 billion yuan from the same month last year, according to data released Thursday by the People’s Bank of China. The figure missed the median forecast of 409.9 billion yuan from a Caixin survey of 12 institutions.
A broader measure of financing known as aggregate financing to the real economy — which includes loans, bonds, and off-balance-sheet credit — came in at 815 billion yuan, far short of the 1.2 trillion yuan expected and nearly 600 billion yuan below the same month in 2024.
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- China’s new yuan loans in October were 220 billion yuan, far below the 409.9 billion yuan forecast and 280 billion yuan lower year-on-year.
- Aggregate financing was 815 billion yuan, missing expectations and nearly 600 billion yuan below the previous year’s level.
- Weak credit growth due to low demand, especially from households, may prompt the central bank to further ease monetary policy this year.
- China International Capital Corp.
- Analysts at China International Capital Corp. suggested the surge in entrusted loans was likely due to the deployment of a 500 billion yuan policy-driven financial tool. Funds from this tool may be recorded as entrusted loans rather than bank loans.
- BNP Paribas
- He Shan, an analyst at BNP Paribas, believes that China's central bank is likely to implement a 10-basis-point interest rate cut before the end of the year. This is due to significant pressure on economic growth in the fourth quarter and a directive from top leadership for timely and strengthened policy application.
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