Chinese state banks’ loan growth slows as policy loans lose steam

Growth in policy loans fell below 15% in June 2025, noted by Morningstar.

Policy loans are losing steam in China as the central bank guides state-owned banks to shift their strategy to quality-oriented targeted lending instead of scale expansion, said Morningstar Equity Research.

Growth in policy loans, including green, industrial, infrastructure, and rural loans, fell below 15% in June 2025. This in turn slowed corporate loan growth to 8.7%.

Household loan growth weakened to 2.5% as the employment outlook remains subdued. Morningstar Equity Research said that this is evidenced by the number of self-employed persons reaching 230 million in June, or 30% of China’s total employed population.

Loan growth for state-owned, city, and rural commercial banks accelerated to 9.1%, 8.5%, and 6.7%, respectively.

Meanwhile, joint-stock banks slowed to 3.6% amidst caution around rising credit risks.