1 China’s October data signals entrenched structural downturn
PBoC financial data for October, Jan-Oct 2025 period
On Nov. 13, the People’s Bank of China released China’s financial data for October 2025 and the first 10 months of the year.
Aggregate social financing
- January to October 2025
- Aggregate social financing reached 30.90 trillion yuan, compared to 27.07 trillion yuan in the same period last year (up 14.2 percent).
- Renminbi loans to the real economy increased 14.52 trillion yuan, compared with 15.69 trillion yuan last year (down 7.4 percent).
- Net corporate bond financing was 1.82 trillion yuan, an increase of 136.1 billion yuan from last year (up 8.1 percent).
- Net government bond financing was 11.95 trillion yuan, an increase of 3.72 trillion yuan from last year (up 45.2 percent).
- Aggregate social financing reached 30.90 trillion yuan, compared to 27.07 trillion yuan in the same period last year (up 14.2 percent).
- October 2025
- Aggregate social financing reached 0.81 trillion yuan, compared to 1.40 trillion yuan in the same period last year (up 42.1 percent).
- RMB loans to the real economy fell 20 billion yuan, compared with an increase of 300 billion yuan last year (down 106.7 percent).
- Net corporate bond financing was 250 billion yuan, compared to 100 billion yuan last year (up 150 percent).
- Net government bond financing was 0.49 trillion yuan, compared to 1.05 trillion yuan last year (down 53.3 percent).
- Aggregate social financing reached 0.81 trillion yuan, compared to 1.40 trillion yuan in the same period last year (up 42.1 percent).
Money supply
- Broad money supply (M2) increased 8.2 percent year-on-year to 335.13 trillion yuan in October.
- Narrow money supply (M1) increased 6.2 percent year-on-year to 112.0 trillion yuan in October.
RMB loans
- New RMB loans totaled 220 billion yuan in October 2025, compared with 500 billion yuan last year (down 56 percent).
- New RMB loans totaled 14.97 trillion yuan in the January-October 2025 period, compared with an increase of 16.52 trillion yuan last year (down 9.4 percent).
- Household loans
- Household loans fell 0.36 trillion yuan in October, compared with an increase of 0.16 trillion yuan last year.
- Household loans increased 739.6 billion yuan in the January-October 2025 period, down 64.8 percent from last year.
- Short-term household loans:
- Decreased 0.29 trillion yuan in October, compared with a 50 billion yuan increase last year.
- Net decrease of 517 billion yuan in the January-October 2025 period, compared with a 451.4 billion yuan increase last year.
- Medium to long-term household loans:
- Decreased 70 billion yuan in October, compared with a 110 billion yuan increase last year.
- Increased 1.26 trillion yuan in the January-October 2025 period, compared with a 1.65 trillion yuan increase last year.
- Corporate and institutional loans
- Corporate and institutional loans fell 0.35 trillion yuan in October, compared with a 0.13 trillion yuan increase last year.
- Corporate and institutional loans increased 13.79 trillion yuan in the January-October 2025 period, compared with an increase of 13.59 trillion yuan last year.
- Short-term corporate loans:
- Decreased 0.19 trillion yuan in October, or the same amount as last year.
- Increased 4.34 trillion yuan in the January-October 2025 period, compared with a 2.64 trillion yuan increase last year.
- Medium to long-term corporate loans:
- Decreased 30 billion yuan in October, compared with an increase of 170 billion yuan last year.
- Increased 8.32 trillion yuan in the January-October 2025 period, compared with a 9.83 trillion increase last year.
RMB deposits
- RMB deposits increased 0.61 trillion yuan in October, compared with an increase of 0.60 trillion yuan last year.
- RMB deposits increased 23.32 trillion yuan in the January-October 2025 period, compared with an increase of 17.22 trillion yuan last year.
- Household deposits
- Decreased 1.34 trillion yuan in October, compared with a decrease of 0.57 trillion yuan last year.
- Increased 11.39 trillion yuan in the January-October 2025 period, compared with an increase of 11.28 trillion yuan last year.
- Non-financial corporate deposits
- Decreased 1.09 trillion yuan in October, compared with an increase of 2.92 trillion yuan last year.
- Increased 0.44 trillion yuan in the January-October 2025 period, compared with a decrease of 2.84 trillion yuan last year.
- Fiscal deposits
- Increased 0.72 trillion yuan in October, compared with an increase of 1.53 trillion yuan last year.
- Increased 2.09 trillion yuan in the January-October 2025 period, compared with an increase of 1.32 trillion yuan last year.
NBS data for October, Jan-Oct 2025 period
On Nov. 15, the PRC National Bureau of Statistics released various economic data for October and the first 10 months of the year. The NBS claimed that China’s economy maintained an “overall stable performance with steady improvement” during the aforementioned period “under the strong leadership of Party Central with Comrade Xi Jinping at the core.” Key data includes:
Fixed-asset investment (Jan-Oct 2025)
- National fixed-asset investment (excluding rural households) declined 1.7 percent year-on-year to reach 40.8914 trillion yuan (calculated on a comparable caliber). Of the total:
- State-owned holding fixed-asset investment grew by 0.1 percent.
- Private fixed-asset investment fell by 4.5 percent.
- Fixed-asset investment by foreign-invested enterprises fell by 12.1 percent.
National real estate market (Jan-Oct 2025)
- Real estate development decreased 14.7 percent year-on-year to reach 7.3563 trillion yuan.
- Residential investment decreased 10.9 percent year-on-year to reach 5.6595 trillion yuan.
- Sales area of new commercial housing decreased 6.8 percent year-on-year to reach 719.82 million square meters.
- Residential sales area decreased 7 percent year-on-year to reach 602.72 million square meters.
- Sales value of new commercial housing decreased 9.6 percent year-on-year to reach 6.9017 trillion yuan.
- Residential sales value decreased 9.4 percent to reach 6.9017 trillion yuan.
Sales prices of commercial housing in 70 major Chinese cities (Oct 2025)
New housing
i) First-tier cities
- Month-on-month: Down 0.3 percent (growth unchanged from previous month).
- Year-on-year: Down 0.8 percent (growth decline grew 0.1 percentage points from the previous month).
- Beijing: MoM down 0.1 percent; YoY down 2.0 percent.
- Shanghai: MoM up 0.3 percent; YoY up 5.7 percent.
- Guangzhou: MoM down 0.8 percent; YoY down 4.2 percent.
- Shenzhen: MoM down 0.7 percent; YoY down 2.6 percent.
ii) Second-tier cities
- MoM: Down 0.4 percent (growth unchanged from the previous month).
- YoY: Down 2.0 percent (growth decline narrowed 0.1 percentage points from the previous year).
iii) Third- and fourth-tier cities
- MoM: Down 0.5 percent (growth decline widened 0.1 percentage points from the previous month).
- YoY: Down 3.4 percent (growth unchanged from the previous year).
Second-hand housing
i) First-tier cities
- MoM: Down 0.9 percent (growth decline narrowed 0.1 percentage points from the previous month).
- YoY: Down 4.4 percent (growth decline widened 1.2 percentage points from the previous year).
- Beijing: MoM down 1.1 percent; YoY down 4.7 percent.
- Shanghai: MoM down 0.9 percent; YoY down 3.4 percent.
- Guangzhou: MoM down 0.9 percent; YoY down 6.4 percent.
- Shenzhen: MoM down 0.9 percent; YoY down 3.3 percent.
ii) Second-tier cities
- MoM: Down 0.6 percent (growth decline narrowed 0.1 percentage points from the previous month).
- YoY: Down 5.2 percent (growth decline widened 0.2 percentage points from the previous year).
iii) Third- and fourth-tier cities
- MoM: Down 0.7 percent (growth decline widened 0.1 percentage points from the previous year).
- YoY: Down 5.7 percent (growth unchanged from the previous year).
CPI and PPI
- China’s consumer price index increased 0.2 percent year-on-year in October, and decreased 0.1 percent year-on-year on average during the Jan-Oct 2025 period.
- China’s producer price index decreased 2.1 percent year-on-year in October, and decreased 2.7 percent year-on-year on average during the Jan-Oct 2025 period.
- China’s purchasing prices for industrial producers (PPIRM) decreased 2.7 percent year-on-year in October, and decreased 3.2 percent year-on-year on average during the Jan-Oct 2025 period.
Our take
China’s official financial and economic data for October and the first 10 months of 2025 reveal the full unleashing of structural pressures accumulated over the past three years. Notably:
New RMB loans totaled just 220 billion yuan, down 56 percent year-on-year — a halving from the prior period.
- Credit extension to the real economy turned negative.
- Household short-term and medium- to long-term loans both contracted.
- Corporate medium- and long-term lending shrank markedly.
- Real estate investment and sales continued their downward trajectory.
- Inflation and industrial prices remained stubbornly subdued.
Concurrently, mainland media reports highlight market behaviors that are amplifying these signals. For instance, mainland media have noted that Chinese banks are inflating loan figures through “quick-lend-and-recover” (即貸即收) tactics. Banks are also offloading batches of repossessed properties, further depressing market prices. Taken together, these developments indicate that China’s economy has entered a structural downturn characterized by collapsing credit demand, self-reinforcing asset deflation, and entrenched expectations of deflation, and is not just experiencing a cyclical dip.
1. The October data indicates that the core problem in China’s financial system is not a shortage of money, but a collapse in demand. Most notably, new RMB loans halved in October compared to a year ago, while “new loans to the real economy” turned negative at minus 20 billion yuan. This is reflective not of slower growth, but of a shift where official money supply is ample, but funds are not reaching businesses and households.
Households are leading the retreat. Total resident lending contracted 360 billion yuan in October, with short-term consumer loans down 290 billion yuan and mortgage lending slipping 70 billion yuan into negative territory. This signals active deleveraging, not policy-induced restraint. Against falling property values and weakening income expectations, Chinese families are prioritizing debt repayment over spending — a classic balance-sheet recession dynamic.
Corporate appetite for expansion has chilled in parallel. Short-term corporate loans fell 190 billion yuan, while medium- and long-term lending rose a meager 30 billion yuan versus 1.7 trillion yuan a year ago. Cumulative Jan–Oct 2025 medium- and long-term corporate lending, though still positive, is roughly 1.5 trillion yuan below last year’s pace, reflecting reluctance among private firms, foreign investors, and even some large enterprises to add capacity or invest.
Monetary transmission has also broken down. M2 grew 8.2 percent year-on-year, yet loan creation lagged far behind prior cycles, producing a textbook liquidity trap. Funds are idling within the banking system rather than circulating into the real economy as uncertainty deters borrowing for investment or consumption. Traditional PBoC tools such as rate cuts and RRR reductions appear to be losing traction.
Finally, the already-weak loan numbers for October contain distortions. Bloomberg News, citing almost two dozen bankers, reported that with organic loan demand evaporating, lenders are pressuring clients with no funding needs to take loans, park them briefly, and repay shortly thereafter. In some cases, banks have offered to cover the interest, with some loan officers using their own money to pay for clients. Meanwhile, an entrepreneur in Guangdong told Bloomberg that bank staff told him to delay a repayment of around 3 million yuan in loans that he was making ahead of schedule so as not to impact the bank’s quarterly targets. While the CCP authorities have sought to crack down on “quick-lend-and-recover” (for example, a branch of Bank of Qingdao Co. was fined 518,300 yuan for inflating deposits and loans via the practice) banks continue to issue phantom loans to prop up their performance metrics. Stripping out such window-dressing, the true October credit shortfall is likely wider than official data suggest.
In sum, the paramount risk in China’s financial sector today is not credit tightening but a structural implosion in credit demand. Aggressive easing (rate cuts, etc.) will likely yield diminishing returns in stimulating new credit demand. This is the hallmark of a balance-sheet-driven downturn, not a temporary downturn.
2. China’s real estate data for October data confirm that the property sector is accelerating into a self-reinforcing negative feedback loop, and is emerging as the central drag on the broader economy. The data also suggests that the pace of deterioration in the real estate sector has sharpened and entrenched.
On Nov. 11, Sina Finance reported the arrest of more than 700 intermediaries across 26 cities in eight provinces for orchestrating “high-appraisal, high-loan” (高評高貸) fraud. These black-market operators fabricated full documentation — fake bank flows, contracts, and phone numbers — while colluding with bank insiders to inflate collateral values and issue larger loans. This left a glut of overvalued properties now stranded on lenders’ balance sheets.
Mainland outlets note that institutions including Lanzhou Rural Commercial Bank have shifted to “bulk direct sales” (批量直售) of repossessed homes, listing them well below prevailing transaction prices. These assets largely stem from borrower defaults that have crystallized into non-performing claims. Incomplete tallies from Alibaba and JD asset-disposal platforms show:
- Since August 2024, Guangdong’s rural credit system alone has listed 12,386 properties.
- Since November 2024, Sichuan’s rural credit system has put 24,821 units up for sale.
Lenders are racing to offload collateral to stem losses, replenish liquidity, and ease NPL ratios. Yet mass disposals inevitably depress secondary-market prices, triggering a second wave of declines.
China’s real estate sector is now experiencing the following negative feedback loop:
- Falling home prices lead to rising negative equity.
- Negative equity leads to household deleveraging (medium- and long-term loans turning negative).
- Household deleveraging leads to subdued consumption, which in turn causes developers to cut investment.
- Declining development investment leads to a rise in bank non-performing loans.
- Banks accelerate property sell-offs to deal with NPLs, leading to further home price declines.
Meanwhile, as secondary-market price declines solidify as an expectation, residential purchase demand will likely remain frozen indefinitely.
Mounting evidence points to a structural rather than cyclical adjustment. For two decades, real estate was China’s primary growth engine. Today, the property sector has become a drag on the economy — eroding household net worth, crimping consumption, deterring private investment, swelling bank bad loans, and starving local government coffers. The downward trajectory remains far from its nadir.
3. Beijing’s official data also shows that deflation risks in China’s economy are becoming entrenched, as insufficient demand results in very low prices (and hence profits). Notably, China’s CPI rose a mere 0.2 percent in October, with the Jan–Oct 2025 average standing at negative 0.1 percent. Meanwhile, the PPI has languished in the negative 2 to negative 3 range for months.
Entrenched deflation expectations are spawning a self-reinforcing vicious cycle:
- Households, fearing income erosion, defer spending. This leads firms, which are pessimistic on demand, to shelve capex.
- Aggregate demand weakness drags prices lower, swells the burden of real debt, and leads to a collapse of borrowing appetite. This deflationary environment significantly weakens the effectiveness of Beijing’s monetary stimulus.
We view October not as a trough but as a potential inflection in a deeper structural adjustment of China’s economy. Absent a marked rebound in November and December readings, these figures will signal more than transient softness — households, corporations, and the financial system are simultaneously entering a “deleveraging–derisking–zero-growth” regime.
