China Three things in China

Economics Research 16 August 2026 | 11:11PM HKT

Three quick highlights from China: Hui Shan | Goldman Sachs (Asia) L.L.C. n Bank loan growth continued to slow: China’s July credit data showed that new total social financing (TSF) flows were better than expected, mainly driven by increased government and corporate bond issuance. By contrast, new bank loan flows declined on a net basis. In year-over-year terms, TSF stock rose 7.4%, while bank loans grew only 5.2% in July. Bank loans used to account for two-thirds of new TSF flows in China, but now make up only one-third.

Bank loans no longer the dominant driver of TSF growth in China

Percent Percent 90 90 Bank loan share of TSF new flows (seasonally adjusted, 3mma)

Source: Haver Analytics, Goldman Sachs Global Investment Research

n Q2 current account surplus still strong: China’s current account surplus as a share of GDP edged down from 3.8% in Q1 to 3.7% in Q2 on a non-seasonally adjusted basis. Compared with Q2 2025, this year’s surplus was higher by 1 percentage point of GDP. As we recently argued, China’s large and growing current account surplus suggests that RMB appreciation is warranted to support external rebalancing, while policies that boost domestic demand are needed for internal rebalancing. These measures may not be sufficient for global rebalancing, but they are necessary steps in the right direction.

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China’s current account surplus as share of GDP edged down in Q2 but remained solid

-50 Current account balance -2 Current account balance as a percentage of GDP (RHS) -

n Soft Q3 activity so far: China’s July activity data will be released on Monday, and we expect industrial production growth to slow to 4.6% yoy from 5.3% yoy in June. We project retail sales and fixed asset investment growth to remain sluggish at 1.5% yoy and -5.8% ytd yoy, respectively. High-frequency data show that Typhoon Dolphin disrupted port activity in August. News articles reported that heavy rainfall led to temporary school and business closures in mid-August in central China. Our latest analysis shows that retail sales growth is likely to average only 1.7% yoy in the second half of 2026.

Typhoon Dolphin disrupted port activity in mid-August

Source: CEIC, Goldman Sachs Global Investment Research

Recent GS China macro research

Asia in Focus: China Retail Sales: Policy Tailwinds Fade, H2 Growth Likely Remains Low, 14 August 2026