(Bloomberg) -- China’s credit expansion unexpectedly slowed in November as loan demand faltered, signaling increased challenges to economic growth.
- Aggregate financing, a broad measure of credit, rose 2.34 trillion yuan, according to Bloomberg calculations based on data released by the People’s Bank of China on Friday. That compares with a median forecast of 2.7 trillion yuan by economists in a Bloomberg survey, and an increase of 2.5 trillion yuan in the same month a year ago.
- Financial institutions offered 580 billion yuan of new loans in the month, Bloomberg calculations showed. The median forecast was 995 billion yuan.
Loans extended to the real economy, which exclude those issued to financial institutions, fell to the lowest for the month of November since 2009. That offset elevated government bond issuance to drag down overall credit growth.
China’s struggling economy has rebounded modestly in recent weeks on the back of more government support, with signs of improvement in consumption and factory activity. But overall confidence remains frail because policies haven’t been strong enough to free the economy from deflation.
For 2025, China’s top leaders signaled they would adopt more forceful stimulus to boost growth and put a greater focus on a consumption sector that’s lagged relative to industrial growth. Top officials led by President Xi Jinping on Thursday said efforts to boost consumer spending would be their top priority.
Beijing shifted its monetary policy for the first time in 14 years to a “moderately loose” stance, signaling the central bank will continue to cut interest rates and lower the amount of cash banks must set aside in reserves. Some economists forecast the deepest rate cuts in a decade, though reductions over the past two years have failed to generate more demand for borrowing.
The stock of broad money supply M2 expanded 7.1% from a year ago, missing expectations. M1, a money supply gauge recently revised to include cash, household and corporate demand deposits, narrowed its decline to 3.7%.
Corporate mid- and long-term loans, which reflects businesses’ willingness to expand investment and production, fell to the lowest for November since 2016. Private investment has been sluggish over the past three years and effectively stayed flat. Household mid-and long-term loans, a proxy for mortgages, rose from a year ago, likely reflecting a recent rebound in property transactions.
China’s effort to rescue indebted local governments likely contributed to the decline in new loans, Financial News — a newspaper managed by the PBOC — cited unnamed experts as saying in a report Friday. Local governments may used the money raised from selling bonds to repay bank loans owed by their financing platforms, according to the report.
(Updates with more details throughout.)
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