China's credit growth in November stays muted on low demand

China's loan growth disappointed in November with muted overall credit expansion, underlining anemic borrowing by households and businesses is still a concern weighing on the economy.

Financial institutions extended ¥392 billion ($55.6 billion) of new yuan loans in the month, falling short of economists' median forecast of ¥450 billion , based on data released by the People's Bank of China on Friday. The stock of outstanding credit to the real economy rose 8.5% from a year ago, matching the pace in October.

Household loans contracted for a second straight month in November, the first time in data going back to 2005, indicating a prolonged period of net repayment of debt from residents. A bleak job market and deteriorating housing market means individuals are focusing on paying down their debt, which threatens to slow growth further.


New medium- and long-term corporate loans weakened from a year ago, indicating lackluster demand for business expansion. Bill financing, a tool commonly used by banks to inflate lending when borrowing demand is weak, more than doubled, suggesting dire business demand.

"We expect credit growth to remain weak over the coming months," said Leah Fahy, China economist at Capital Economics. "Loan demand is likely to stay subdued, with deflation likely to keep real lending rates elevated even accounting for the incremental policy rate cuts we are forecasting."

The growth rate of the credit stock accelerated earlier this year before slowing down in recent months, due to the distortion from the government selling more bonds early this year than in last year. China's weakening economic momentum in recent months has been pointing to a further deterioration in domestic demand, whose sluggishness over the past few years has already been a drag on borrowing.

Before the data release, analysts at Citigroup Inc. expected "mundane" credit figures while anticipating early signs of impact from the government's ¥500 billion policy bank financing for investment projects.

EU to charge ?3 on small parcels in apparent attack on China
Meanwhile European Union (EU) finance ministers agreed on Friday to impose a three-euro duty on all small parcels imported into the bloc starting July 1, 2026, to help tackle a flood of cheap imports by the likes of Shein and Temu.

The move comes a month after the bloc agreed to scrap a duty exemption for packages worth less than ?150 ($174) imported directly to consumers in the 27-nation bloc, in many cases via Chinese-founded platforms.

The fixed fee will be introduced on a temporary basis and will stay in place until the bloc can settle on a permanent solution for taxing such imports, an EU spokesperson said. Last year, 4.6 billion such small packages entered the EU region-more than 145 per second-with 91% originating in China. The EU expects those numbers to rise.