China’s New Yuan Loans Turn Negative for First Time Since 2005

China’s bank lending slumped into negative territory in July, with new yuan loans shrinking by about 500 billion yuan (US$69.7 billion), according to calculations based on People’s Bank of China data released on 13 August. The drop marks the first monthly contraction since July 2005 and the steepest decline since December 1999, underscoring an abrupt pull-back in credit demand after banks front-loaded lending in the previous quarter. Economists polled by Reuters had expected lending to expand by roughly 300 billion yuan. July’s outcome contrasts sharply with the 2.24 trillion yuan disbursed in June and the 2.6 trillion yuan issued a year earlier. The weakness in new loans contributed to slower overall credit growth and adds pressure on Beijing to roll out additional monetary or fiscal support as it seeks to stabilise a patchy post-pandemic recovery.