Analysis: China’s Banks Are Flush With Cash but Short of Good Loans

Caixin Global · Ding Feng Published Oct · 2026-10-30 00:00 UTC

Policy is steering credit toward favored sectors such as technology, as weak loan demand and cheaper bond financing leave banks competing for fewer attractive borrowers

1. [para. 1][para. 2][para. 3] China's policy push to steer bank credit toward technology, green industries, and small businesses is creating intense competition among lenders, while healthy firms outside these favored sectors struggle to obtain loans. A bank branch manager described visiting a tech company that was too busy hiring and expanding to even need a loan, contrasting sharply with non-tech companies that find banks reluctant to lend to them.

2. [para. 4][para. 5] Since the 2023 Central Financial Work Conference defined "five major categories" (technology, green, inclusive, pension, and digital finance), banks have received strong incentives to expand lending in these areas. The results are dramatic: People's Bank of China Governor Pan Gongsheng said new loans to real estate and infrastructure fell from over 60% of the total a decade ago to around 10%, while the five categories now account for more than 70% of new lending.

3. [para. 6][para. 7][para. 8] Technology companies are among the biggest beneficiaries. Outstanding loans to small and midsize tech enterprises reached 4.15 trillion yuan ($622.6 billion) at the end of June, up 20% year-on-year. Competition is intense, especially for smaller loans under 10 million yuan that can qualify as both technology and inclusive finance. According to one branch manager, banks have "greatly relaxed restrictions on interest rates and terms."

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