In November, China’s new bank loans reflected a disappointing growth as household borrowing continued to decline amid persistent challenges in the property sector. Policymakers are vowing to implement more economic stimulus measures next year to promote recovery.

Chinese financial institutions issued 390 billion yuan ($55 billion) in new loans, a rise from 220 billion yuan in October but still below the 500 billion yuan that analysts had anticipated and lower than the 580 billion yuan from the same month last year. A significant slowdown in household borrowing, especially in mortgage lending, has significantly impacted loan expansion. Experts attribute part of the decline to local government debt issues, loan write-offs, and a shift toward alternative financing, yet weak demand for mortgages remains a major hindrance.

Since tighter regulations induced a liquidity crisis in the real estate sector in 2021, China's housing market has been struggling. Numerous property developers have defaulted on their loans, and a drop in home prices by 3.7% is expected this year, with additional decreases forecasted through 2026 before stabilization in 2027. In November, household loans, including mortgages, decreased by 206.3 billion yuan after a contraction of 360 billion yuan in October. In contrast, corporate loans increased from 350 billion to 610 billion yuan, reflecting continued business borrowing amidst economic uncertainty.

To stimulate economic activity, the Chinese government introduced a 500-billion-yuan policy-based financing initiative in September, which has funded over 2,300 projects worth around 7 trillion yuan by late October. Despite these efforts, consumers and businesses are remaining cautious about accumulating more debt due to ongoing property sector troubles and diminished confidence. Chinese officials have committed to a “proactive” fiscal policy for next year, planning to deploy monetary tools like cuts to the reserve requirement ratio and adjustments to interest rates to enhance economic expansion, which analysts are estimating will aim for around 5%.

For the first 11 months of 2025, new yuan loans totaled 15.36 trillion yuan, lower than 17.1 trillion yuan the previous year. Outstanding loans recorded a growth of 6.4% in November compared to last year, reaching a historic low and slightly dropping from October’s 6.5%. Conversely, the broad M2 money supply rose by only 8% year-on-year in November, below the expected 8.2%, while the narrower M1 money supply grew by 4.9%, down from 6.2% in October. Total social financing, which gauges overall credit and liquidity within the economy, remained stable, increasing by 8.5% year-on-year, unchanged from the prior month.