FX.co ★ China New Yuan Loans Below Forecasts

In May 2025, Chinese banks issued new yuan loans amounting to CNY 620 billion, a notable increase from the CNY 280 billion recorded in April. April's figures were especially low, marking the smallest amount for that month since 2005, a period marked by heightened trade tensions with the United States. However, by May, there was a breakthrough with a fragile 90-day trade truce, prompting the People’s Bank of China and the Chinese government to implement measures aimed at stabilizing the economy and financial markets. These measures included broad interest rate cuts and liquidity injections. Despite this monthly increase, the May loan figures did not meet expectations, which had anticipated between CNY 850 billion and CNY 950 billion, and also compared unfavorably with the previous year’s performance. On another note, total social financing surged by CNY 2.29 trillion, more than doubling April's CNY 1.16 trillion and aligning closely with forecasts. Nevertheless, other indicators suggested that credit demand remained weak. The growth of outstanding loans decelerated to 7.1%, the slowest pace since at least 1998. Additionally, the growth of the M2 money supply eased to 7.9%, down from 8% in April and short of the anticipated 8.1%.