China’s slower loan growth is becoming a new normal as property developers and local government financing vehicles reduce borrowing, People’s Bank of China Governor Pan Gongsheng said. New yuan loans reached 60 billion yuan in August 2026, rebounding from July’s record 340 billion yuan contraction but falling well short of market expectations. Outstanding yuan loans have surpassed 280 trillion yuan, roughly $41.73 trillion, but Pan said sustaining the credit growth rates of the past would increase leverage while producing diminishing returns. Outstanding real estate loans fell by more than 2 trillion yuan between 2025 and the first half of 2026, weakening demand from one of China’s largest historic sources of borrowing. In 2025, loans accounted for 45% of the increase in total social financing, compared with 47% for combined bond and equity financing, marking the first time non-loan channels became the largest source of new funding. Pan said high-tech manufacturing and green technology contributed more than 40% of economic growth in the first half of 2026 while requiring less leverage than traditional sectors. The PBOC is emphasizing financing quality, stronger interest-rate transmission and more efficient capital allocation over headline loan volumes, while seeking to curb speculative fund circulation and inefficient financial expansion.