China’s June bank lending misses forecasts again

Chinese banks extended 1.61 trillion yuan ($237.75 billion) in new loans in June 2026, more than tripling May's 520 billion yuan but falling well short of market expectations, underscoring the economy's continued struggle with anemic credit demand amid a prolonged property downturn and soft business investment.

Lending Misses the Mark Again

The June lending figure missed the roughly 2 trillion yuan forecast by analysts, according to calculations by The Wall Street Journal News Corp ↗ 0.28% based on data released by the People's Bank of China on Wednesday. Economists surveyed by the Journal had expected 1.95 trillion yuan in new loans. Total social financing, a broader measure of credit that includes nonbank lending, came in at 3.36 trillion yuan, up from 2.03 trillion yuan in May.thestandard+1

Outstanding yuan loan growth slipped to 5.2 percent year-on-year in June, a fresh record low, down from 5.5 percent in May. The persistent shortfall in credit growth reflects weak spending and investment by both companies and households, with the property slump continuing to drag on household borrowing.marketwatch+2

PBOC Pledges Support, Curbs Bill Market Distortions

The PBOC has reaffirmed its commitment to maintaining an "appropriately loose" monetary policy and stepping up counter-cyclical adjustments to revive domestic consumption. A deputy governor reiterated during remarks on Tuesday that the seven-day reverse repo rate remains the main policy rate.mitrade+1

Separately, Reuters reported on Monday that Chinese regulators issued guidance to some banks barring them from conducting bill re-discount operations at rates below 0.5 percent. The move targets distortions in the commercial paper market, where banks have been aggressively purchasing bills to pad their loan books amid insufficient genuine credit demand.money.usnews+1

Structural Headwinds Remain

The data caps a half-year in which credit has repeatedly disappointed. Banks issued 9.11 trillion yuan in new loans during the first five months of 2026, down from 10.68 trillion yuan in the same period a year earlier. The central bank had even instructed some lenders in late June to increase their lending, a sign of how reluctant borrowers have become.english.www+2

Despite holding benchmark lending rates steady for 13 consecutive months, the PBOC acknowledged in a July monetary policy committee meeting that China still faces weak demand and external shocks. Analysts suggest further easing remains possible in the second half of 2026, most likely in late third quarter to fourth quarter.secure.fundsupermart+3