BEIJING, March 13 - New yuan lending by Chinese banks fell sharply in February, sliding to 900 billion yuan as weak demand for credit continued to weigh on borrowing in the world’s second-largest economy.
The February figure represents a large retreat from the seasonally strong start to the year in January, when banks extended 4.71 trillion yuan in new yuan loans. Analysts polled ahead of the data had expected roughly 979 billion yuan of new lending in February.
Credit activity typically eases in February after banks front-load lending at the beginning of the year, and this year that pattern was amplified by the country’s long Lunar New Year holiday, a nine-day break that curtailed business activity and reduced loan demand.
February’s new lending was also below the 1.01 trillion yuan recorded in the same month a year earlier, underlining persistently weak appetite for borrowing in the face of a prolonged slump in the property sector and cautious sentiment among firms.
Because the central bank provides only aggregate January-February lending data, the monthly February number is derived from comparing that two-month total with January’s standalone figure published earlier. Under that comparison, outstanding yuan loans grew 6.0% year-on-year in February, the slowest pace on record and down from 6.1% growth in January. Analysts had anticipated 6.0% year-on-year growth.
The composition of flows showed marked weakness in both household and corporate lending. Household loans, including mortgages, contracted by 650.7 billion yuan in February after rising by 456.5 billion yuan in January. Corporate new lending fell to 1.49 trillion yuan in February from 4.45 trillion yuan in January, based on the same month-to-month derivation.
Policymakers have reiterated readiness to support growth. PBOC governor Pan Gongsheng said China will continue to implement a moderately loose monetary policy this year and will use tools such as cuts to the reserve requirement ratio and interest rates flexibly to support growth.
Beijing has set a slightly lower economic growth target of 4.5%-5% for 2026, down from last year’s 5%, and has pledged to boost domestic demand, with a particular emphasis on consumption and nudging overall price levels into positive territory this year.
Authorities also outlined measures intended to increase banks' capacity to lend and to channel funds into consumer demand and strategic sectors. Plans announced include injecting 300 billion yuan into major state banks this year to enhance lending capacity and mitigate financial risks; earmarking 250 billion yuan in ultra-long special treasury bonds for consumer goods trade-in programs in 2026; and creating a 100 billion yuan fiscal-financial coordination fund to spur domestic demand. The government said it will prioritise expanding domestic demand and intensifying support for high-tech industries.
Monetary aggregates showed continued expansion. Broad M2 money supply rose 9.0% year-on-year in February, slightly above the 8.8% median forecast in analyst polls and essentially unchanged from January’s 9.0% growth. The narrower M1 measure grew 5.9% year-on-year in February, up from 4.9% in January.
Outstanding total social financing, a wide gauge of credit and liquidity that includes unconventional channels, increased 8.2% year-on-year in February, the same pace as in January. The authorities noted that any acceleration in government bond issuance could lift such financing measures.
Context and implications
The large month-on-month swing in new lending reflects the interplay of seasonal lending patterns, holiday-related disruptions to demand and deeper structural weaknesses in key borrowing sectors such as property and corporate investment. Policy-makers have signalled a willingness to deploy both fiscal and monetary tools to bolster lending capacity and stimulate consumption, but the near-term picture remains one of subdued credit uptake.