China’s central bank released January financial statistics on February 13, showing a robust early-year expansion in credit and money supply that the People’s Bank of China (PBOC) says is helping ensure a smooth economic start to 2026. Broad money (M2) expanded by 9.0% year‑on‑year to CNY 347.19 trillion at month‑end, while total social financing stood at CNY 449.11 trillion, up 8.2%. January net financing flows were also strong, with social financing adding CNY 7.22 trillion, outperforming the same month last year by CNY 166.2 billion.
Government bond issuance was the single largest contributor to the jump in overall financing. Authorities issued roughly CNY 976.4 billion of government bonds in January—about CNY 283.1 billion more than a year earlier—and government bond net issuance accounted for 13.5% of January’s total social financing, the highest January share since 2021. At the same time, direct financing channels such as corporate bond issuance and equity fundraising are accelerating, broadening the funding mix.
Bank lending showed pronounced momentum. Renminbi loans increased by CNY 4.71 trillion in January, bringing the outstanding balance to CNY 276.62 trillion, a 6.1% year‑on‑year rise that remains ahead of nominal GDP growth. Corporate and institutional lending surged—enterprise loans rose by CNY 4.45 trillion in January, with more than 70% in medium‑ and long‑term maturities—while household loans increased by CNY 456.5 billion as pre‑New Year consumption and seasonal spending supported demand for both short‑ and long‑term retail credit.
Officials and analysts attribute the pickup in M2 growth partly to a base‑effect: January 2025 saw a relatively small M2 increase, so year‑on‑year comparisons are temporarily amplified. They also point to a buoyant start in capital markets that has supported broader liquidity conditions. The PBOC cautioned that as the low base fades, money‑supply growth should moderate and return to a steadier pace.
Two policy features stand out. First, the overall cost of corporate borrowing remains unusually low: the weighted average corporate loan rate was about 3.2% in January, roughly 2.4 percentage points below the high reached when China began easing rates in 2018. Second, credit allocation increasingly favors “higher quality” sectors—technology finance, inclusive small‑business lending and long‑term manufacturing finance have expanded faster than aggregate lending—reflecting a deliberate shift toward directing financial resources to growth and productivity priorities.
The immediate implications are clear: accommodative monetary conditions, active fiscal bond issuance and targeted credit flows are providing a near‑term boost to growth, funding infrastructure projects and supporting households and firms. Risks remain, however. Heavy reliance on government bond issuance to sustain headline financing growth and the sheer scale of outstanding credit require vigilance on debt sustainability and local‑government and corporate balance sheets. Investors should also watch for the removal of base effects in coming months, which will test whether lending momentum can be sustained without further policy stimulus.