China bank loans contract in July for second time in 2026

China’s new yuan loans contracted for the second time in 2026, declining to 810 billion yuan in July from 1.48 trillion yuan in June, according to preliminary data from the central bank.

The drop reflects subdued demand for credit amid a broader slowdown in economic activity, with analysts citing weak corporate investment and cautious consumer spending as key factors. The People’s Bank of China (PBOC) has maintained accommodative monetary policy in recent months, including targeted lending support, but the latest figures suggest limited traction so far.

Total social financing, a broader measure of credit and liquidity in the economy, also fell to 1.19 trillion yuan in July, down from 2.08 trillion yuan in June. The decline was driven by a sharp contraction in corporate bond issuance and a slower pace of entrusted and trust loans.

Economists warn that persistently weak loan growth could hinder efforts to stabilize growth, particularly as the property sector remains under pressure and export demand softens. The central bank has signaled further policy easing if necessary, though the timing and scale of additional measures remain uncertain.

The latest data underscores the challenges facing policymakers as they seek to revive domestic demand and sustain economic momentum in the second half of 2026.