China's New Yuan Loans Contract July First Time 20 Years

China's new yuan loans unexpectedly contracted by 50 billion yuan in July, marking the first such decline in about 20 years and signaling weak demand in the economy despite government efforts to stimulate growth. This contraction was much larger than analyst forecasts and represented the largest monthly decline since 1999, with banks issuing fewer loans following a strong credit expansion in June. The decline reflects ongoing challenges such as sluggish domestic demand, a protracted property crisis, and global trade uncertainties, even as Beijing attempts to stabilize the economy through broader monetary measures. Although the People's Bank of China has not provided specific explanations for the drop, the trend highlights concerns about the second half of the year, when economic pressures are expected to intensify. The recent U.S.-China tariff truce temporarily eased trade tensions but has not yet restored robust business confidence. Overall, the data underscore the fragility of China's economic recovery amid both domestic and external headwinds.