China Central Bank Governor Declares End of Massive Credit Growth
Pan Gongsheng announced that slower loan growth is the new normal for China as the economy shifts toward bond and equity financing.
People's Bank of China Governor Pan Gongsheng announced that the era of massive credit growth in China has ended, describing slower loan expansion as a new normal for the macroeconomic landscape. Writing in the Communist Party theoretical journal Qiushi, Pan stated that the deceleration in overall financing is beneficial for maintaining stable debt levels and preventing the inflation of speculative bubbles.
The shift follows official data showing a sharper-than-expected deceleration in loan expansion for August. Pan explained that shrinking credit demand from local government financing vehicles and the property sector is currently outpacing growth in emerging industries. He noted that high-tech manufacturing and green technology rely more on data and intellectual property than traditional bank lending.
Pan highlighted a structural transition in the economy, noting that bond and equity financing surpassed loans as a share of total social financing for the first time in 2025. He argued that maintaining previous rates of credit growth is both difficult and unnecessary, as the slowdown helps eliminate inefficient firms and stabilizes overall leverage.
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