China’s banking sector saw a notable increase in new loans in January 2026, yet the growth fell short of analysts’ expectations and remained well below last year’s record levels. The tepid expansion highlights the ongoing weakness in domestic credit demand and the cautious pace of economic recovery.
Data released by the People’s Bank of China (PBOC) on Friday revealed that new yuan-denominated loans reached 4.71 trillion yuan (approximately $681.56 billion) in January, nearly a fivefold rise from December’s 910 billion yuan. However, this figure slightly underperformed the forecast of 5 trillion yuan. Compared with January 2025, when new loans totaled 5.13 trillion yuan, this year’s level remains marginally lower.
Analysts note that loan issuance typically surges at the beginning of the year, as banks aim to maintain key client relationships and secure market positioning. Yet, in January 2026, short-term corporate credit demand was relatively subdued. Economists attribute part of this slowdown to the Spring Festival, which shifted business activity and borrowing patterns into February.
Guotai Junan International’s chief economist Zhou Hao commented, “January’s credit data sends a mixed signal. Aggregate financing exceeded expectations, but the pace of new loan growth was slightly weaker. Meanwhile, the share of total social financing (TSF) from new loans is gradually declining. In the second half of 2025, it fell below 50%, indicating that government-directed financing continues to play a key role in credit expansion.”
Government surveys of business activity further suggest that manufacturing in January slowed slightly due to weak domestic demand. Last year’s export-led growth helped push official GDP growth to nearly 5%, but for 2026, factors such as trade tensions, structural imbalances, and geopolitical uncertainties are expected to weigh on economic performance. Early forecasts suggest growth may be limited to around 4.5% this year.
Key loan indicators for January 2026 are summarised below:
| Indicator | January 2026 | December 2025 | Year-on-Year Growth |
|---|---|---|---|
| New Bank Loans | 4.71 trillion yuan | 910 billion yuan | – |
| Household Loans | 456.5 billion yuan | -91.6 billion yuan | – |
| Corporate Loans | 4.45 trillion yuan | 1.07 trillion yuan | – |
| Total Social Financing (TSF) | +8.2% | +8.3% | – |
| Broad Money Supply (M2) | +9.0% | +8.5% | – |
| Narrow Money Supply (M1) | +4.9% | +3.8% | – |
| Total Yuan Loans | +6.1% | +6.4% | – |
The PBOC has already reduced some sector-specific interest rates and retains room to cut reserve requirements or benchmark rates further. These measures aim to stimulate household spending, counter persistent deflation, and manage the long-term property sector risks.
Economist Julian Evans-Pritchard noted, “With less support from fiscal policy this year, the PBOC will need to take a more active role to counter the slowing momentum of the economy, compared to the largely neutral stance it maintained last year.”
Overall, January’s loan data reflects the fragile state of China’s credit demand, underscoring that policy interventions and targeted incentives are likely necessary to sustain robust economic growth.