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China Credit Improves on Government Bond Sales, Short-Term Loans

  • Aggregate social financing was 2.37 trillion yuan in December
  • That’s an improvement from 2020, but home loan demand was weak
Updated on

China’s credit expansion stabilized in December, driven by an unseasonal spike in government bond sales and a jump in short-term corporate borrowing that made up for a drop in lending to households.

With China’s economic growth slowing due to weak private demand and a property crisis that has hit home sales and loan demand, there are growing expectations that the central bank will loosen credit policy to try and stimulate demand early in 2022. The government has also vowed to accelerate investment, pushing faster sales of infrastructure bonds from late in 2021 to pay for spending.