China in bond sale deluge to help economy withstand surging US tariffs

BEIJING - China’s credit expanded more than expected in March as the government accelerated bond offerings to help the economy offset the impact of surging US tariffs on Chinese goods.

Aggregate financing, a broad measure of credit, rose 5.89 trillion yuan (S$1.06 trillion), according to Bloomberg calculations based on data released by the People’s Bank of China (PBOC) on April 13.

That compares with a median forecast of 4.96 trillion yuan by economists in a Bloomberg survey, and an increase of 4.83 trillion yuan in the same month a year ago.

Financial institutions offered 3.64 trillion yuan of new loans in the month, Bloomberg calculations showed. The median forecast was 3 trillion yuan.

Bigger government bond sales were a key driver of aggregate financing in March, as business demand for longer-term credit stayed weak. March is also traditionally a strong month for borrowing because banks tend to extend more credit at the end of each quarter to meet lending targets. 

Net sovereign and local bond financing reached nearly 1.5 trillion yuan in March, the highest for any March since at least 2017, according to PBOC data. The bond deluge came after China vowed to front-load fiscal spending earlier in 2025, on anticipation of looming trade tensions with the US.

China’s economy likely held up in the first quarter before the trade conflict between the world’s two biggest economies escalated.

Newly added US tariffs on Chinese goods now stand at 145 per cent, well above levels economists say would decimate bilateral shipments, which were worth US$690 billion (S$909 billion) in 2024.

The impact of the punitively high tariffs is gradually kicking in, with US retailers suspending orders and halting shipments amid the deep uncertainty. At stake are millions of jobs in China’s sprawling manufacturing sector and Beijing’s ambitious goal of growing the economy by around 5 per cent in 2025.

The US on April 11 announced it

exempted smartphones, computers and other electronics

from its so-called reciprocal tariffs, which could provide some relief for Chinese exporters as the exclusion covers more than US$101 billion in goods from the country.

However, US President Donald Trump’s policy flip-flop also underscores the massive uncertainty faced by the Chinese economy.

The PBOC has been pushing for lower borrowing costs for businesses and households. The weighted average rate on new loans extended to companies in local and foreign currencies was 3.3 per cent in March, 45 basis points less than a year earlier, the central bank-affiliated Financial News reported on April 13.

The personal housing loan rate fell 60 points to 3.1 per cent, it said. 

Short-term loans to businesses soared more than 40 per cent in March from a year earlier.

But the willingness of companies in China to expand investment and production remained subdued, with corporate mid- and long-term loans staying slightly lower than the reading a year earlier.

Household mid-and long-term loans, a proxy for mortgages, rose from a year ago after steady home sales in February. But housing sales resumed declines in March, highlighting that the country’s property market is yet to find a bottom. BLOOMBERG