Post by : Saif Rahman

In November, China’s new bank loans increased but fell short of projections, showcasing a significant drop in household borrowing amidst a lingering downturn in the property sector. In response, policymakers have vowed to implement additional economic stimulus measures next year to foster growth.

Chinese financial institutions extended 390 billion yuan ($55 billion) in new loans in November, a rise from 220 billion yuan in October. This amount, however, was notably below the anticipated 500 billion yuan and less than the 580 billion yuan recorded a year prior. A notable decline in household borrowing, especially in mortgages, significantly hindered loan growth. Analysts also indicated that local government debt swaps and loan write-offs may contribute to this slowdown, yet the lack of demand for mortgages continues to impact progress.

The housing sector in China has endured hardships since 2021 due to stricter regulations that triggered a liquidity crisis for developers. Significant defaults on debts by real estate firms have resulted in an expected 3.7% drop in home prices this year, with further declines predicted until 2026 before reaching a state of stabilization in 2027. Household loans, including mortgages, plummeted by 206.3 billion yuan in November after a 360 billion yuan reduction in October, whereas corporate loans surged from 350 billion to 610 billion yuan, signifying that businesses remain active in borrowing amidst economic apprehension.

To bolster the economy, the Chinese government rolled out a 500-billion-yuan policy-driven financial initiative in September. By late October, the initiative had financed over 2,300 projects amounting to nearly 7 trillion yuan. Despite these efforts, both consumers and businesses are hesitating to incur more debt owing to ongoing property issues and lackluster confidence. Chinese authorities have committed to a “proactive” fiscal strategy for the forthcoming year and plan to utilize monetary instruments like reserve requirement ratio reductions and interest rate modifications to stimulate economic growth, aiming for a target of approximately 5%.

For the first eleven months of 2025, new yuan loans totaled 15.36 trillion yuan, below the 17.1 trillion yuan from the previous year. Outstanding loans exhibited a growth of 6.4% in November compared to a year earlier, signaling a historic low, slightly dipping from October’s 6.5%. Furthermore, the broad M2 money supply rose by 8% year-on-year in November, falling short of the expected 8.2%, while the narrower M1 money supply increased by 4.9%, down from 6.2% in October. Total social financing, which gauges overall credit and liquidity within the economy, exhibited an 8.5% year-on-year increase, maintaining the same rate as the previous month.

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