Key facts
- PBOC Governor Pan Gongsheng suggested slower credit growth could be China's "new normal."
- He indicated that past credit growth levels are neither easy nor necessary to maintain.
- Pan cited shrinking loans to the property sector and local government financing vehicles as reasons for the shift.
- The shift is linked to the economy moving from credit-intensive real estate to light-asset technology.
People's Bank of China Governor Pan Gongsheng indicated that a period of slower credit growth, coupled with more efficient allocation, may represent China's "new normal." Speaking at the Lujiazui Forum in Shanghai, Pan stated that maintaining the country's previous pace of credit expansion is "neither easy nor necessary." This outlook comes as China's economy undergoes a structural shift away from credit-hungry real estate and towards lighter-asset technology sectors. Pan highlighted that outstanding loans directed towards the property sector and local government financing vehicles are currently shrinking, underscoring the changing credit landscape.