China’s New Bank Loans in May 2025 Reflect Cautious Economic Sentiment
China’s New Bank Loans in May 2025 Reflect Cautious Economic Sentiment
On June 13, 2025, fresh economic data from China revealed insights into the country’s lending activity for May, shedding light on the ongoing dynamics of its financial landscape. According to the People’s Bank of China (PBOC), new bank loans issued in May totaled 620 billion yuan ($85.5 billion), a figure that doubled from April’s 280 billion yuan but fell short of market expectations set at around 850 billion yuan. The data, released today, underscores a cautious approach by businesses and households despite recent policy efforts to stimulate economic activity.
The PBOC’s report, published this morning, highlights a broader context of economic challenges, including subdued consumer confidence and external trade pressures. Total Social Financing (TSF), a comprehensive measure of credit and liquidity, reached 2.3 trillion yuan in May, up from 1.16 trillion yuan in April. This uptick reflects increased government bond issuance aimed at bolstering economic growth. However, outstanding yuan loan growth touched a record low of 7.1%, signaling persistent hesitancy in borrowing. Money supply metrics also showed mixed results: M2 money supply grew to 7.9% year-on-year, slightly below the anticipated 8.1%, while M1 rose to 2.3%, surpassing estimates of 1.7%.
Analysts note that the data, unveiled today, reflects the impact of a recent U.S.-China trade truce, which temporarily eased tensions and boosted sentiment. Yet, the lower-than-expected lending figures suggest that firms and consumers remain wary amid deflationary pressures and a sluggish property market. The PBOC’s recent rate cuts, including a 10-basis-point reduction in May, have yet to fully translate into robust loan demand. Looking ahead, experts anticipate further policy measures, potentially including additional rate adjustments or fiscal stimulus, to invigorate China’s economy.
Today’s release of this economic indicator has drawn attention from global markets, as investors assess China’s ability to navigate its complex economic terrain. The lending data serves as a critical gauge of domestic demand and the effectiveness of Beijing’s stimulus efforts, with implications for global trade and commodity markets.
