The People's Bank of China released its financial statistics report for April 2026 on May 14. The data shows that the cumulative increase in the aggregate financing to the real economy (AFRE) for the first four months of 2026 was 15.45 trillion yuan, 893 billion yuan less than the same period last year. New yuan-denominated loans issued in the first four months totaled 8.59 trillion yuan. At the end of April, the broad money supply (M2) balance was 353.04 trillion yuan, a year-on-year increase of 8.6%. The narrow money supply (M1) balance was 114.58 trillion yuan, up 5% year-on-year.
Specifically for April, the yuan-denominated loan balance decreased by 10 billion yuan, while the new AFRE increment was 620 billion yuan.
At the end of April, the year-on-year growth rate of AFRE was 7.8%, and M2 grew by 8.6% year-on-year, maintaining reasonable growth. Industry insiders noted that the sustained growth rates of AFRE and M2 exceeding the nominal economic growth rate reflect that current social financing conditions are accommodative, and the effective financing demand of the real economy is being adequately met.
**Slower Loan Growth May Become the New Normal** April is traditionally a slower month for credit. The yuan-denominated loan balance decreased by 10 billion yuan, marking the second monthly decline following July of last year.
In April, household loans decreased by 786.9 billion yuan. Within this, short-term loans fell by 446.2 billion yuan, while medium- and long-term loans decreased by 340.8 billion yuan. Loans to enterprises (and institutions) increased by 390 billion yuan. Of this, short-term loans dropped by 460 billion yuan, medium- and long-term loans fell by 410 billion yuan, and bill financing surged by 1.2429 trillion yuan. Loans to non-banking financial institutions rose by 174.5 billion yuan.
For the first four months, by sector, household loans decreased by 490.2 billion yuan. Short-term household loans fell by 610.2 billion yuan, while medium- and long-term household loans increased by 119.9 billion yuan. Loans to enterprises (and institutions) increased by 8.99 trillion yuan. Within this, short-term loans rose by 3.67 trillion yuan, medium- and long-term loans increased by 5.01 trillion yuan, and bill financing grew by 142.9 billion yuan. Loans to non-banking financial institutions decreased by 193.5 billion yuan.
Since 2024, the growth of personal loans has slowed, contributing to a continuous decline in the household sector's leverage ratio, which dropped from 62.3% in Q1 2024 to 59.0% in Q1 2026. Experts point out that the slowdown in personal loan growth and the steady decline in the household leverage ratio represent a natural process where the household sector is voluntarily reducing its debt burden and improving its balance sheet.
At the end of April, the outstanding balance of yuan-denominated loans was 280.5 trillion yuan, a year-on-year increase of 5.6%, which was 0.1 percentage points lower than the previous month.
Industry experts note that China's total loan volume is already substantial, and a moderation in its growth rate is a natural phenomenon that should be viewed objectively with a mature perspective. After decades of relatively high growth, China's outstanding loan balance has exceeded 280 trillion yuan, reaching a very high level. A slowdown in loan growth from this base is natural and aligns with the country's shift from high-speed growth to high-quality development. Furthermore, existing loans will continue to support economic development, as both utilizing existing loans and issuing new ones are fundamentally similar in their significance for economic growth.
Experts suggest that China's loan growth may have moved away from the earlier path of "high growth and scale expansion." A slower growth rate compared to the past may become the new normal. This is not a sign of weak economic growth or insufficient financial support. On the contrary, it vividly reflects high-quality economic development and a more diversified financial system, as seen through the lens of the single financing channel of loans.
**Robust Corporate Bond Growth Shows Significant Substitution for Loans** From the perspective of AFRE structure, both government bond and corporate bond financing have shown relatively rapid growth this year, providing some replacement and substitution for loans.
Central bank data shows that in the first four months of 2026, yuan-denominated loans issued to the real economy increased by 8.5 trillion yuan, 1.29 trillion yuan less than the same period last year. Foreign currency loans issued to the real economy, converted into yuan, increased by 103.6 billion yuan, 213.4 billion yuan more than the same period last year. Entrusted loans decreased by 94.1 billion yuan, a larger drop of 99.4 billion yuan year-on-year. Trust loans increased by 300 million yuan, 45.1 billion yuan less than the same period last year. Undiscounted bankers' acceptances increased by 51.3 billion yuan, 199.2 billion yuan less than the same period last year. Net corporate bond financing was 1.5 trillion yuan, 739.3 billion yuan more than the same period last year. Net government bond financing was 4.45 trillion yuan, 399 billion yuan less than the same period last year. Domestic equity financing for non-financial enterprises was 200.8 billion yuan, 65.5 billion yuan more than the same period last year.
In recent years, financing policies and mechanisms for the technology and innovation sector have been continuously improved. Coupled with the recent low bond financing interest rates, enterprises have shown strong willingness and motivation to raise funds through the bond market by issuing instruments like sci-tech innovation bonds and industrial bonds. In the first four months of this year, net corporate bond financing reached 1.5 trillion yuan, 739.3 billion yuan more than the same period last year, effectively doubling in scale.
Industry experts believe that both loans and bonds are important channels for real economy financing and can be observed in aggregate. From an international perspective, major institutions like the Federal Reserve and the Bank for International Settlements (BIS) include both loans and bonds in their statistics for "credit." For China, if this approach is referenced and bank loans and bank bond investments are combined, the growth rate of this combined indicator in recent months has been around 8%. This is over 2 percentage points higher than the 5%-6% loan growth rate and is also more consistent with the trends of broader financial aggregates like AFRE and M2.
In the first four months of this year, net government bond financing was 4.45 trillion yuan. While this provides strong support for economic development and risk resolution, it also creates a substitution effect for loans.
Some market participants estimate that approximately 1.2 trillion yuan in special refinancing bonds for replacing existing implicit debt were issued in the first four months of this year. Based on the full-year issuance quota of 2 trillion yuan, the issuance progress had reached about 60% by the end of April, with some provinces already at 100%. In the long term, local government debt resolution is beneficial for repairing local government balance sheets and facilitating risk clearance. This allows local finances to free up more funds for areas such as social welfare, technological innovation, and infrastructure construction. However, in the short term, because a significant portion of bond issuance proceeds is used to repay bank loans, it exerts a certain downward pull on the numerical growth of loans. Experts estimate that after adjusting for the impact of local special bond replacements, the loan growth rate at the end of April would be around 6.1%.
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