China Aggregate Financing Growth Slows to 33 Trillion Yuan Annualized

As of end-August 2026, the annualized pace of aggregate social financing slowed to 33 trillion yuan per year from 33.9 trillion yuan per year a month earlier, the lowest level since 2025. Within this, the annualized pace of real-economy credit fell to 13.21 trillion yuan per year, extending a slowdown that began in March 2023. In terms of new additions, real-economy credit has fallen to about 40% of aggregate social financing, with non-credit financing becoming the main channel for new social financing; in terms of the stock, real-economy credit still accounts for about 60%. At end-August, the outstanding stock of aggregate social financing was 464.8 trillion yuan, of which the outstanding balance of real-economy yuan loans was 278.63 trillion yuan.

The trend slowdown in real-economy credit is mainly related to the contraction of credit linked to the real estate market and the advancement of local government debt resolution. On government debt, the outstanding government debt balance had nearly breached 100 trillion yuan by May 2026. The 2026 broad government deficit is 13.89 trillion yuan, 50 billion yuan higher than in 2025. In the first eight months of 2026, cumulative government financing was 8.77 trillion yuan, 63% of the full-year plan, below the 67% sequential pace; in the same period of 2025, cumulative government financing was 10.27 trillion yuan, 74% of the full-year plan.

As of end-August 2026, base money supply grew 8.1% year on year, edging down 0.6 percentage points from the end of the previous month and remaining at a high level since 2023. The spread between the market target rate DR001 and the policy rate has held within 2 basis points for four consecutive months, the narrowest and most stable spread since 2023.

As of end-August 2026, the balance of commercial bank system assets was 493.69 trillion yuan, up 6.1% year on year, the second-lowest level on record, after a low of 5.83% in January 2025; the year-on-year growth rate has declined continuously since the start of 2026, when it was 8.82%. Over the same period, the net interest margin of commercial banks recovered to 1.41% from 1.4%.

In the first eight months of 2026, the real economy obtained a cumulative 17.2 trillion yuan in financing from banks, accounting for 86% of the increase in bank assets over the same period. Of this, the corporate sector obtained 11.9 trillion yuan in financing from the banking system, including 11.4 trillion yuan in credit and 0.5 trillion yuan in bonds, accounting for 81% of actual corporate financing; the government sector obtained 6.6 trillion yuan in financing, accounting for 75% of actual government financing; and the outstanding credit balance of the household sector fell by 1.04 trillion yuan. Of the 20 trillion yuan in net new bank assets over the same period, bond-type assets contributed more than 7 trillion yuan, or 36%, compared with 32% in the same period of 2025.

In the first eight months of 2026, total bank liabilities increased by 20 trillion yuan, of which corporates and households contributed nearly 10 trillion yuan, while funds from financial markets contributed more than 8 trillion yuan, including more than 7 trillion yuan from non-bank funds and nearly 1 trillion yuan from the central bank, accounting for 40%, up from 25% in the same period of 2025. Compared with the same period of 2025, the asset-liability structure of the commercial bank system has become more dependent on financial markets. Changes in the banking system match structural changes in economic activity: financing by new-growth corporate and government sectors relies on market-based financing channels; the central bank maintains ample liquidity and improves the policy rate mechanism; financial regulators maintain strict oversight of "idle fund circulation"; and the stability of commercial banks' net interest margins depends more on financial markets.