Goldman Sachs: China Credit Growth Surprised to the Upside in December

Goldman Sachs reports that China's December 2025 credit growth exceeded market expectations, driven primarily by stronger-than-expected loan disbursements. New RMB loans reached RMB 910 billion, surpassing the market consensus of RMB 802 billion, while aggregate total social financing (TSF) rose by RMB 2.21 trillion against expectations of RMB 1.905 trillion. Despite the headline beat, underlying credit structure reveals persistent weakness in real economy demand. Household loans declined by RMB 92 billion, a sharp deterioration from the RMB 350 billion increase recorded in the same period last year. Corporate loans grew by RMB 1.07 trillion, but this expansion was heavily reliant on short-term financing, including RMB 370 billion in short-term loans and RMB 350 billion in bill financing. TSF stock growth decelerated slightly from 8.5% year-over-year in November to 8.3% in December, while RMB loan stock growth held flat at 6.4%. Monetary aggregates showed divergence, with M2 accelerating from 8.0% to 8.5%, while M1 growth slowed from 4.9% to 3.8%. The M1 deceleration likely reflects a slower fiscal expenditure pace compared to the significant government easing seen in December 2024. Fiscal deposits fell by RMB 1.382 trillion, approximately RMB 290 billion less than the prior year's decline. Seasonally adjusted TSF flows declined month-over-month due to reduced government bond issuance.