Analysis: Plunging Yields and Debt Swaps Are Rewiring China’s Credit Market

Traditional bank loans have fallen to less than 60% of China’s total credit supply for the first time in seven years, as plunging interest rates drive corporate and government borrowers into the bond market.

This structural change underscores a fundamental rewiring of Chinese finance, driven by a maturing capital market and a massive state-led debt swap program that is replacing expensive bank loans with cheaper direct financing.