China Boosts Credit with $204B Bond Push--But Borrowing Stays Muted
China's credit growth picked up in Maybut the momentum came from Beijing, not the private sector. The People's Bank of China reported nearly 1.5 trillion yuan ($204 billion) in government bonds were sold last month, roughly 20% higher than a year ago. That marks the third time in 2025 bond sales have topped 1 trillion yuan in a single month. The surge helped lift total aggregate financing to 2.29 trillion yuan, an increase from 2 trillion yuan in May 2024.
On the ground, though, the appetite for new borrowing looks subdued. Households took out just 54 billion yuan in new loans last month, bringing the year-to-date total to 572 billion yuanthe lowest since at least 2009. New loans from financial institutions also fell, landing at 620 billion yuan, well below last year's 945 billion yuan for the same period. This comes even after the PBOC announced sweeping monetary easing in early May, including across-the-board rate cuts and liquidity moves that could inject 2.1 trillion yuan into the economy.
According to Bloomberg Economics' Eric Zhu, May's numbers suggest the government is delivering on its stimulus plans, but the response from households and businesses remains cautious. For global investors watching China's recovery story, the next leg of growth may depend on whether demand strengthens beyond public-sector activity. Companies with strong exposure to the Chinese consumer, including Tesla (NASDAQ:TSLA), could be watching for early signs of a turn in private-sector sentiment.
This article first appeared on GuruFocus.
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