China’s aggregate financing misses estimates as loan demand weakens through August

China’s broadest measure of credit creation came in lighter than expected, with aggregate financing to the real economy (AFRE) totaling CNY23.91 trillion from January through August. Economists had penciled in CNY24.372 trillion, making the shortfall roughly CNY460 billion. The data, released by the People’s Bank of China, extends a pattern that has been building all year. Through the first seven months, AFRE had already landed at CNY22.25 trillion, a figure that was CNY1.74 trillion below the same stretch in 2025. Loan demand keeps shrinking In July alone, new yuan loans contracted by CNY340 billion on a net basis, marking the second monthly decline of 2026. For the January-to-July window, new yuan loans totaled CNY10.38 trillion. That was roughly CNY2.49 trillion lower than the comparable period last year. By the end of July, the outstanding stock of RMB loans stood at CNY278.57 trillion, growing 5.2% year-over-year. Government bonds fill the gap Where private-sector borrowing has retreated, the state has stepped in. Government bond issuance has become a noticeably larger share of total financing flows this year, partially offsetting the weakness in traditional bank lending. The ...