PBOC Orders Banks to Boost May Lending as April New Yuan Loans Contracted
Updated
Updated · Reuters · May 28
PBOC Orders Banks to Boost May Lending as April New Yuan Loans Contracted
7 articles · Updated · Reuters · May 28
Major state-owned banks received informal PBOC guidance last week to increase May lending, an unusual repeat intervention after a similar push in April.
April new yuan loans shrank for the first time in nine months, and sources said household and corporate borrowing demand has stayed weak this month.
Higher energy costs from the three-month-old U.S.-Israeli war on Iran and China's prolonged property slump are weighing on consumption, confidence and private investment.
Banks are also tightening credit to households and small private firms as defaults rise, forcing some lenders to buy short-term commercial bills to meet loan targets.
China's economy grew 5.0% in the first quarter, but early second-quarter momentum is fading and analysts still do not expect rapid broad policy easing as inflation pressure builds.
China is battling weak demand and high energy costs. Can its targeted policies prevent economic stagnation?
With property wealth erased and demand weak, will China's forced lending create Japan-style 'zombie banks'?
As China pushes exports to offset weak home demand, are global trade wars now inevitable?
In late May 2026, China’s credit market faced significant turbulence, prompting the People’s Bank of China (PBOC) to intervene directly. This urgent action followed notably weak credit data for April, raising concerns about the true health of the economy and fueling worries over a deepening lending crisis. The PBOC responded by issuing informal guidance to major state-owned banks, aiming to encourage lending and stabilize credit growth. At the same time, official channels urged the market to interpret the slowdown rationally, highlighting both the severity of the situation and the central bank’s efforts to manage market sentiment.