China's New Yuan Loans Miss Market Expectations — Update

New bank lending in China missed market expectations in June, as sluggish domestic demand weighed on appetite for borrowing.

Chinese banks extended 1.61 trillion yuan, equivalent to $237.75 billion, in new yuan loans in June, according to calculations by The Wall Street Journal based on data from the People's Bank of China on Wednesday.

While the reading was higher than the 520 billion yuan recorded in May, it fell short of the 1.95 trillion yuan expected by economists surveyed by The Wall Street Journal.

China's credit growth has repeatedly undershot market expectations as sluggish domestic demand weighed on spending and investment by companies and households.

In a press conference following the release of the credit data, Xie Guangqi, head of the PBOC's monetary policy department, said slower but higher-quality credit growth would be a "new normal" for the Chinese economy.

Xie noted that a single loan indicator no longer fully reflects the actual financing flowing into the real economy. He suggested that analysts and investors evaluate financial conditions by looking at combined loan and bond data, while paying closer attention to broader indicators such as interest rates and overall financing structures.

Also released Wednesday was China's total social financing, which is a broader measure of credit that includes nonbank financing and came in at 3.36 trillion yuan, higher than May's 2.03 trillion yuan.

M2, the broadest measure of money supply, rose 8.0% from a year earlier in June, down from May's 8.6% rise and also lower than the 8.5% growth anticipated by surveyed economists.

Beijing has guided commercial banks to lower financing costs to boost domestic demand. China's average interest rate on new corporate loans dropped by about 20 basis points from a year earlier to roughly 3% in the first half of the year, while new mortgage rates held steady at approximately 3.1%, Zou Lan, a PBOC vice governor, said at the same briefing.

He also added that the central bank would explore ways to step up operations of its new policy tool, overnight reverse repurchase agreements, to meet banks' liquidity needs.

Write to Singapore Editors at singaporeeditors@dowjones.com

Corrections & Amplifications

This article was corrected at 0122 GMT to reflect that Zou Lan is a PBOC vice governor. The original article misstated the name as Cai Lan.

(END) Dow Jones Newswires

July 15, 2026 05:00 ET (09:00 GMT)