China’s credit growth decelerated in October, falling short of expectations as lending lagged despite a notable increase in government bond issuance. This trend highlights a slower pace in overall financing activity during a traditionally subdued month for bank lending.
According to data from the People’s Bank of China, total social financing, a broad metric that includes loans, bonds, and other credit sources, expanded by 1.4 trillion yuan ($195 billion) in October. This fell below the median estimate of 1.5 trillion yuan from a Bloomberg survey and represented a drop from the 1.8 trillion yuan growth seen in the same period last year.
A significant portion of the new financing, more than three-quarters, came from government bond sales, which surpassed 1 trillion yuan for the third consecutive month. The overall stock of credit grew at the slowest annual pace since records began in 2017, reflecting ongoing challenges in bolstering private sector credit growth.
Despite the credit slowdown, China’s economic activity showed some early signs of stabilization last month. This follows a broad stimulus push since late September, which included a series of interest-rate cuts aimed at reviving growth. However, October typically sees weaker credit growth, as banks are generally less pressured to meet quarterly lending targets, contributing to the lower figures for the month.
The data reflects China’s continued reliance on fiscal support through government bond sales, amid lingering challenges in spurring bank lending and broader private sector credit expansion.
