China’s Credit Growth Weakens as Households Cut Back on Debt
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China’s appetite for credit faltered sharply in October, with new loans slumping and household borrowing shrinking, reinforcing concerns about sluggish consumer confidence and continued headwinds for the broader economy.
Banks issued 220 billion yuan ($31 billion) in new yuan-denominated loans last month, down roughly 280 billion yuan from a year earlier, according to data from the People’s Bank of China. Total social financing — a broader gauge of credit and liquidity — fell to 815 billion yuan, the weakest monthly tally since August 2024 and down 597 billion yuan year-on-year.
The contraction in household borrowing highlights a renewed deleveraging trend, as consumers pulled back in the face of economic uncertainty. Loans to households dropped by 360.4 billion yuan in October, with short-term borrowing accounting for 286.6 billion yuan of the decline and medium- to long-term loans falling by 70 billion yuan.
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- New yuan loans in China fell to 220 billion yuan in October 2024, down 280 billion yuan year-on-year, with household borrowing contracting by 360.4 billion yuan.
- Total social financing dropped to 815 billion yuan, the weakest since August 2024; household deposits decreased by 1.34 trillion yuan, while WMPs rose to a record 31.07 trillion yuan.
- Long-term corporate loan growth slowed, indicating weak business confidence, as banks shifted to bill financing and households moved savings into higher-yield assets.
- Soochow Securities Co. Ltd.
- Lu Zhe, the chief economist at Soochow Securities Co. Ltd., commented on China's declining appetite for credit in October. He noted that consumer credit remains soft despite stimulus measures and attributed the drop in long-term borrowing to renewed weakness in the housing sector.
- Huachuang Securities Co. Ltd.
- Huachuang Securities Co. Ltd. provided an analysis stating that a surge in corporate borrowing at the end of September likely reduced the demand for loans in October. The firm cautioned that with diminishing policy stimulus and year-end effects, further increases in long-term corporate lending are improbable.
- Shenwan Hongyuan Group Co. Ltd.
- Analysts at Shenwan Hongyuan Group Co. Ltd. suggested that banks might be delaying loan issuance until early 2026, using bill financing as a temporary alternative. They also believe that curbing aggressive competition could help improve banks' profitability.
- Puyi Standard
- Puyi Standard (普益标准) is a research firm. According to their data, the total value of wealth management products (WMPs) reached 31.07 trillion yuan by the end of October, marking the highest level since February 2022 and a 772 billion yuan increase from September.
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