China's credit expansion slowed in May from a year earlier, as private demand remained subdued even though regulators pushed banks to lend more.
Aggregate financing, a broad measure of credit, increased ¥2.03 trillion ($300 billion), according to Bloomberg calculations based on data released by the People's Bank of China on Friday. While that exceeded the median estimate in a Bloomberg survey of economists, it was more than 11% weaker than in the year prior.
Financial institutions extended around ¥520 billion of new loans following their contraction in the previous month.
Weak underlying credit demand has shown little sign of rebounding despite efforts by the central bank to stimulate the flow of credit.
Following the unusual slump in loans in April, it reportedly issued guidance to some major state-owned financial institutions to boost lending. And as excess liquidity drives banks to lend to each other, money market rates have dropped so low that the PBOC was forced to intervene.
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"Credit data improved after regulators asked banks to speed up lending," said Zhaopeng Xing, senior strategist at Australia & New Zealand Banking Group. "Borrowing demand has been stable at a rather weak level."
Household loans contracted for the second straight month. Lending to non-financial companies increased as a result of a boom in bill financing, with medium and long-term loans - a measure of corporate investment confidence - continuing to fall.
Slower issuance of government bonds compared with last year is also creating a drag on the overall credit figures. Sales accelerated to around 1.2 trillion yuan from about 900 billion yuan in April but were still short of the 1.5 trillion yuan raised in May 2025, central bank data showed.
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The PBOC has recently taken steps to prevent borrowing costs from falling too far below its policy rate, instructing major state-owned lenders to curb interbank lending while draining some liquidity from the financial system.
Officials have sought to strike a balance between supporting growth and avoiding excessive funds circulating within financial markets without entering the real economy.
"The data suggests ensuring ample liquidity and low financing cost may not be sufficient to boost credit demand," said Ding Shuang, chief economist for Greater China and North Asia for Standard Chartered Plc. "The fiscal spending needs to pick up to create more credit demand."
