China’s New Bank Loans Shrink in July as Borrowing Demand Stays Weak

China’s new bank loans unexpectedly contracted in July, underscoring weak borrowing demand even as a surge in government bond issuance supported broader credit growth.

Financial institutions recorded a net decline of 340 billion yuan ($50.4 billion) in new yuan loans last month, far below expectations for a 126 billion yuan increase in a Caixin poll of economists. Both households and businesses reduced debt, with household loans shrinking by about 460 billion yuan and corporate loans falling roughly 130 billion yuan.