China’s New Yuan Loans Surge in May Amid U.S. Trade Truce and Policy Support
China’s banking sector saw a sharp rebound in credit issuance last month, with new yuan loans soaring to an estimated 850 billion yuan ($118.27 billion) in May—more than tripling April’s 280 billion yuan and matching borrowing levels seen in May 2024.
The recovery in credit demand is being attributed to the temporary 90-day trade truce between the United States and China, along with fresh monetary easing measures introduced by Beijing.
According to a Reuters poll of 18 economists, the rebound reflects both seasonal lending patterns and renewed optimism following reduced trade tensions and policy support. In mid-May, Washington and Beijing agreed to scale back their triple-digit tariffs, which had been re-imposed in early April. The easing of external pressure appears to have improved credit appetite, particularly among businesses looking to secure financing ahead of quarterly targets.
Further bolstering sentiment, Chinese authorities implemented interest rate cuts and a significant liquidity injection, although Citi Research analysts cautioned that the impact of these measures may be delayed. “Bills discount rate stayed low in May, and we expect new RMB loans at RMB900 billion, largely in line with last May’s level,” Citi noted in a research report.
Despite the uptick in lending, headwinds persist. Factory activity contracted for the second straight month in May, underlining ongoing challenges from both external trade pressures and weak domestic demand. Chinese households remain cautious, tightening spending amid income pressures and economic uncertainty.
With speculation growing that Beijing may introduce additional stimulus, investors and policymakers alike will be watching closely for signs of sustained recovery in credit growth and broader economic activity.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a “detective-like” mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
