People's Bank of China Governor Pan Gongsheng said slower but higher-quality loan growth was becoming a normal feature of the economy as traditional borrowers reduce demand. He said outstanding bank loans exceeded 280 trillion yuan, making earlier growth rates harder and less necessary to sustain. Financing conditions nevertheless remained relatively accommodative and effective borrowing needs were still being met.
The assessment reflects a structural shift away from property companies and local-government financing vehicles, both important users of bank credit. Pan said lending to those sectors was contracting while emerging industries had not fully replaced the lost demand. Economic Information Daily reported that China's total social financing stock exceeded 460 trillion yuan and broad money exceeded 350 trillion yuan.
FINANCING MIX SHIFTS
Loans accounted for 45% of the increase in total social financing in 2025, while bond and equity financing together represented 47%, according to the central-bank figures reported by Reuters. That was the first time the combined bond and equity share exceeded the loan contribution. The change supports the PBOC's broader measure of financing conditions beyond bank credit alone.
Pan said high-technology manufacturing and green industries generated more than 40% of China's economic growth in the first half of 2026. Those activities rely more heavily on technology, data and intellectual property than on land and physical plant. Their expansion is therefore less dependent on conventional bank lending than the sectors now contracting.
POLICY FRAMEWORK ADAPTS
Economic Information Daily said Pan outlined a continued shift in the monetary-policy framework away from quantitative targets and towards price-based tools. The proposed direction includes strengthening the short-term interest-rate mechanism, improving policy-rate transmission and refining deposit and loan pricing. The central bank also intends to treat aggregate financing indicators more as references than fixed objectives.
Pan's article set out a policy framework rather than announcing an immediate interest-rate decision. Subsequent PBOC lending and total social financing releases will show whether the funding mix continues to move towards bonds, equity and new-economy borrowers. Future policy communications will also indicate how quickly the central bank reduces its emphasis on credit quantities.