Standard Chartered\u2019s Carol Liao and Moriarty Lam analyze slowing loan growth in China despite stable real Gross Domestic Product (GDP) and recent reflation. They note broad-based weakness across housing-related lending and other sectors, as new services and high-tech growth engines are more credit-light and rely more on direct financing. This transition is seen as critical for China\u2019s debt sustainability and financial-market development.<\/p>\n
Loan growth slowdown and structural shift<\/p>\n
“China\u2019s loan growth has continued to decelerate, despite relatively stable real GDP<\/a> growth and recent reflation.”<\/p>\n “The slowdown is broad-based: housing-related lending has contracted, and loan growth in the rest of the economy has also slowed since 2023, including in relatively resilient sectors such as light industries and services.”<\/p>\n “China\u2019s emerging growth engines, such as services and high-tech industries, are less loan-intensive than traditional growth drivers such as housing and infrastructure.”<\/p>\n “This shift matters for China\u2019s debt sustainability and financial-market development.”<\/p>\n “Furthermore, with savings remaining abundant while loan demand softens, interest rates<\/a> are likely to remain low for longer.”<\/p>\n