China’s Bank Loan Gauge Contracts for First Time in 19 Years

(Bloomberg) — China’s bank loans to the real economy contracted for the first time in 19 years, a grim milestone that underscores why weak domestic demand has emerged as a major hurdle to the economy’s growth and recovery.

Yuan-denominated bank loans that exclude those extended to financial institutions shrank by 77 billion yuan ($10.7 billion) at the end of July from a month ago, according to data released Tuesday by the People’s Bank of China (PBOC). That marked the first drop since July 2005, as more debt was repaid than taken out.