China’s credit growth slowed again in April; RMB loans hit a record low for April

Overview

This report focuses on China’s monetary and credit data for April 2026. The core conclusion is that credit expansion continued to weaken: new TSF came in significantly below expectations, RMB loans contracted, and lending in both the corporate and household sectors was soft. The report believes that government bond issuance may accelerate in coming months to support still-weak fixed asset investment, thereby helping stabilize credit expansion.

Core views

First, April new TSF was only RMB621bn, below both market consensus and Nomura’s forecast, while the year-on-year growth rate of outstanding TSF fell to 7.8%, the weakest monthly reading on record. Second, new RMB loans were -RMB10bn, below the market expectation of RMB300bn and Nomura’s forecast of RMB384bn, and the year-on-year growth rate of outstanding RMB loans fell to a historical low of 5.6%. Third, corporate lending was weaker than the headline data suggested because new bill financing surged to RMB1,243bn, likely masking insufficient underlying corporate credit demand. Fourth, household lending remained weak, reflecting continued caution in household borrowing. Fifth, the report still expects no policy rate cuts or reserve requirement ratio cuts in 2026.

Analysis framework

The report assesses China’s credit demand, financing structure, and policy support by decomposing new RMB loans, TSF sub-items, household and corporate lending, deposit structure, M1/M2 growth, interbank rates, and the PBOC’s medium- to long-term liquidity operations.

Methodology notes

• Macro Credit AnalysisTSF Component Breakdown

  Use the total social financing aggregate and its components, such as RMB loans, government bonds, corporate bonds, undiscounted bankers’ acceptances, trust loans, and entrusted loans, to judge the strength of real-economy financing.

  The report attributes the main drag on April TSF, which came in below expectations, to weak RMB loan growth, while noting that corporate bond financing was relatively solid and government bond issuance was slightly below the level seen a year earlier.

• Bank Credit AnalysisLoan Sector Breakdown

  Break down new RMB loans by corporate, household, and non-bank financial institution sectors to assess financing demand across different segments.

  The report argues that the surge in bill financing within corporate loans does not represent genuine credit demand, while continued negative growth in household loans shows that household borrowing appetite remains weak.

• Monetary Conditions AnalysisM1/M2 and Rate Monitoring

  Assess overall liquidity by combining money supply growth, DR007, 10-year government bond yields, and the PBOC’s liquidity injections.

  In April, M2 rose slightly while M1 edged lower; the monthly average DR007 fell to 1.35%, below the PBOC’s 7-day reverse repo rate, indicating relatively loose liquidity conditions.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Chinese Government Bonds

  An important vehicle for policy support and credit expansion

  Strengths

  The report expects government bond issuance to accelerate in the coming months to support fixed asset investment and stabilize credit expansion.

  Weaknesses

  Net government bond financing in April was RMB906bn, below RMB973bn a year earlier, weighing on that month’s TSF.

  Comparison

  Compared with the improvement in corporate bond financing, government bond issuance in April was slightly weaker than a year earlier, but it could once again become a support for TSF in the future.

  Risks

  If government bond issuance does not accelerate as expected, credit expansion may remain weak.

• Bank Credit

  The core channel reflecting real-economy financing demand

  Strengths

  Corporate bill financing and corporate bond financing still provided some support.

  Weaknesses

  New RMB loans were negative, and both household and corporate medium- to long-term loans were weak, indicating insufficient underlying loan demand.

  Comparison

  Compared with the slight rebound in M2 growth, RMB loan growth continued to decline, showing that monetary expansion has not been fully transmitted into credit expansion.

  Risks

  Persistently weak credit demand could drag on investment, consumption, and banks’ balance sheet expansion.

• Corporate Bonds

  An alternative financing channel for corporates

  Strengths

  April net corporate bond financing was RMB454bn, above RMB234bn a year earlier.

  Weaknesses

  The improvement in corporate bonds may partly reflect a shift in financing from loans to bonds rather than a meaningful improvement in total demand.

  Comparison

  Corporate bonds performed better than the RMB loan component.

  Risks

  If bond financing fails to support investment expansion, its ability to underpin real-economy demand will remain limited.

• Household Credit

  A leading indicator of household consumption and property demand

  Strengths

  No clear strengths; the data continue to show caution.

  Weaknesses

  April household loans were -RMB787bn, with both short-term and medium- to long-term loans weaker than a year earlier.

  Comparison

  The household sector was clearly weaker than the corporate sector and has remained soft since the start of the year.

  Risks

  Weak borrowing appetite among households could weigh on consumption, property sales, and banks’ retail credit.

Key data

• April new TSFRMB621bnBelow the market consensus of RMB1,251bn, Nomura’s forecast of RMB1,019bn, and RMB1,160bn in April 2025.
• YoY growth of outstanding TSF7.8%Down from 7.9% in March, marking the weakest monthly reading on record.
• April new RMB loans-RMB10bnBelow the market consensus of RMB300bn and Nomura’s forecast of RMB384bn, and the first monthly negative reading since July 2025.
• YoY growth of outstanding RMB loans5.6%Down from 5.7% in March and at a new historical low.
• New RMB loans to the corporate sectorRMB390bnBelow RMB610bn a year earlier; bill financing rose to RMB1,243bn.
• New RMB loans to the household sector-RMB787bnWeaker than -RMB522bn a year earlier, with both short-term and medium- to long-term loans more negative.
• April M2 YoY growth8.6%Up slightly from 8.5% in March.
• April M1 YoY growth5.0%Down slightly from 5.1% in March.
• April monthly average DR0071.35%Below 1.44% in March and below the PBOC 7-day reverse repo rate of 1.40%.
• Monthly average yield on 10-year Chinese government bonds1.78%Below 1.81% in March.

Impact & implications

The credit data show that financing demand in the real economy remains weak, especially in the household sector and in underlying corporate loan demand. The surge in bill financing may reduce the explanatory power of headline corporate loan data. The decline in household deposits and the increase in deposits at non-bank financial institutions may reflect households shifting toward investment products amid lower deposit rates. Future credit stabilization is more likely to rely on faster government bond issuance and fiscal support rather than policy rate cuts or reserve requirement ratio reductions.

Risks

• Credit expansion remains below expectations, weighing on real economic activity.
• Household borrowing and underlying corporate loan demand remain weak.
• The surge in bill financing may mask insufficient demand for medium- to long-term corporate loans.
• If government bond issuance does not accelerate as expected, the basis for TSF stabilization may be insufficient.
• M2 is rising while loan growth is falling, which may indicate funds are circulating within the financial system rather than reaching the real economy.

What to watch

• Whether government bond issuance accelerates in the coming months.
• Whether new RMB loans return to positive growth, especially corporate medium- to long-term loans and household medium- to long-term loans.
• Whether the share of bill financing declines, as a test of whether genuine corporate loan demand is improving.
• The persistence of household deposits shifting toward non-bank financial institutions or investment products.
• The combined signal from M1, M2, DR007, and 10-year government bond yields on liquidity and real-economy demand.
• Whether the PBOC continues to avoid policy rate cuts or RRR cuts.