FX.co ★ China Credit Issuance Continues to Weaken

New yuan loans issued by Chinese banks increased by a net CNY 60 billion in August 2026, far below the CNY 590 billion recorded in the same month a year earlier and well under the median market forecast of a CNY 400 billion net increase. The figure followed a net contraction of CNY 340 billion in July, the steepest monthly decline on record, underscoring the persistent weakening in bank credit activity as a slowing economy and depressed consumer sentiment—especially in the housing sector—continued to restrain loan demand. The pattern also reflects an ongoing shift away from traditional industries toward the technology sector, which more often raises funds in the bond market rather than through bank lending. Meanwhile, aggregate financing, a broader gauge of credit in the Chinese financial system, reached CNY 1.66 trillion, indicating that a larger share of credit was being raised via government bond issuance. Outstanding loans grew 4.9% year-on-year.