As credit demand remained weak in China’s second-largest economy, fresh bank lending rose in January but fell short of expectations and the record level set a year earlier.

On Friday, the People’s Bank of China reported that banks extended 4.71 trillion yuan ($681.56 billion) in new yuan loans in January, up from 910 billion in December but missing analysts’ expectations.

Chinese credit data for January 2026 was mediocre. Zhou Hao, chief economist at Guotai Junan International, said aggregate finance exceeded forecasts and new loan growth marginally undershot consensus.

Zhou predicted that government-driven funding will continue to drive credit growth, with the share of new loans in total social financing falling below 50% in the second half of 2025. Fiscal policy will remain expansionary, and the fiscal deficit is expected to remain above 4% of GDP in 2026

An export boom drove China’s economic growth to 5% last year, but structural imbalances, trade conflicts, and geopolitical uncertainties threaten the forecast. Economic growth will decelerate to 4.5% in 2026,

As a prolonged housing slowdown and sluggish domestic consumption weigh on corporate and consumer confidence, Chinese new bank lending fell to a seven-year low of 16.27 trillion yuan in 2025.