China’s January Lending Surges but Falls Short of Expectations

Beijing, 13 February 2026 – China’s new bank lending in January surged sharply from December but came in below market forecasts and well short of the record levels seen a year earlier, underscoring continued weak credit demand in the world’s second-largest economy.

According to data released on Friday by the People’s Bank of China (PBOC), banks extended 4.71 trillion yuan ($681.6 billion) in new yuan loans during January. This represents a substantial rise from 910 billion yuan in December but falls short of analysts’ expectations of 5.0 trillion yuan and below the 5.13 trillion yuan recorded in January 2025.

Credit usually spikes at the start of the year as Chinese banks front-load lending to capture high-quality customers and market share. However, subdued short-term financing needs by firms may have dampened demand this January, partly due to the late Spring Festival, which falls in mid-February this year.

Zhou Hao, chief economist at Guotai Junan International, commented, “China’s credit data for the first month of 2026 sent mixed signals. Aggregate financing exceeded expectations, but new loan growth slightly undershot consensus. The share of new loans in total social financing has been declining, remaining below 50% for much of the latter half of 2025, indicating a growing reliance on government-driven funding.”

The official business survey for January also highlighted a slowdown in factory activity, reflecting weak domestic demand. Despite China achieving last year’s growth target of around 5%, structural imbalances, trade tensions, and geopolitical uncertainty continue to pose risks, with forecasts projecting a slowdown to 4.5% growth in 2026.

Policymakers have indicated readiness to deploy additional stimulus this year. The central bank has signalled room for cuts in reserve requirement ratios and broad interest rates, following sector-specific rate reductions last month.

Household and corporate loans showed divergent trends in January: mortgages and other household loans rose 456.5 billion yuan, rebounding from a December contraction of 91.6 billion yuan, while corporate loans surged to 4.45 trillion yuan from 1.07 trillion yuan.

Meanwhile, money supply indicators were mixed: broad M2 grew 9.0% year-on-year, exceeding the 8.4% forecast, while narrow M1 increased 4.9%, up from 3.8% in December. Outstanding yuan loans rose 6.1% year-on-year, a record low, and total social financing (TSF) increased 8.2%, slightly down from 8.3% in December.

Julian Evans-Pritchard, head of China economics at Capital Economics, observed: “With fiscal support likely to be more modest this year, the PBOC will need to act to prevent credit growth—and broader economic activity—from slowing too rapidly.”

Key Credit Indicators for January 2026