The People’s Bank of China reported that financial institutions’ RMB loan balances reached 265.41 trillion yuan by end-Q1 2025, marking a 7.4% year-on-year increase – a 2.2 percentage point deceleration from Q1 2024. This continued slowdown from 2024’s 10% growth reflects both banks’ more balanced annual credit allocation and weakening corporate financing demand, particularly notable during what is traditionally peak lending season.
A concerning divergence emerged in loan structures: medium/long-term loans grew just 8.7% annually (first single-digit growth since 2024), while short-term lending growth also moderated. This suggests reduced appetite for capital investment among businesses, potentially signaling caution about economic prospects despite government stimulus efforts.
The data highlights China’s ongoing credit normalization process as policymakers balance financial risk control with growth support. With both corporate and household borrowing momentum softening, analysts anticipate further monetary easing measures, though transmission to the real economy remains challenged by weak confidence across manufacturing and property sectors.
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