China’s Stimulus Stabilises Markets but Unlikely to Revive Property Demand in World Economy News 21/01/2026 China’s latest targeted financial measures – including the raising of the relending quota to targeted sectors, and cuts to commercial real estate (CRE) downpayments – will provide modest support for market liquidity and relieve near-term refinancing pressure, but are unlikely to drive a sustained recovery in property demand, says Fitch Ratings. Medium-term risks to bank asset quality may rise if large-scale lending flows to vulnerable borrowers. Separately, greater non-bank financial institution (NBFI) involvement in bond investments – particularly through leveraged strategies – could heighten the risk of a sharp unwinding if market conditions change. The People’s Bank of China’s recent 25bp reduction in relending rates, and the lowering of minimum downpayments for CRE from to 30% from 50%, confirm a continued policy preference for incremental, targeted easing rather than broad-based credit stimulus. These measures are intended to relieve funding pressure for micro and small enterprises (MSEs), the private sector, and selected real estate segments, while preserving financial system discipline. However, the effectiveness of these steps in reviving aggregate credit demand remains uncertain. Fitch forecasts total loan growth to slow to 6.5% in 2026, and that banks will continue to prioritise underwriting discipline and stability over aggressive expansion. Relending to targeted sectors should help to ease near-term refinancing pressure, particularly among MSEs, and support asset quality. However, there is a risk that support measures may only postpone, rather than resolve, underlying credit issues if their financial profiles do not improve, as these sectors typically include more vulnerable borrowers. The CRE sector is likely to see only a marginal uplift in transactions following the downpayment cut. The lower entry cost will benefit smaller-ticket commercial apartments in tier-1 and strong tier-2 cities, where these products can act as quasi-residential substitutes. Nevertheless, the main constraint on CRE activity remains weak buyer confidence in property values and returns, rather than affordability alone. A marked recovery in transaction volumes or prices appears unlikely with overall sentiment subdued. On the other hand, risks of increased leverage, and therefore higher mortgage risk, will need to be monitored if the policy environment continues to encourage borrowing among less creditworthy buyers. NBFIs are becoming more active in China’s credit landscape, with increased participation in bond market investments as mutual funds and trust companies continue to expand assets under management, while lending in trust-loan format to local government financing vehicles (LGFVs) and real estate has declined due to regulatory curbs. However, NBFIs’ increased footprint in bond markets – even in higher-quality bonds – could face snapback risks, as they are adopting more leveraged investment strategies and may encounter liquidity risk amid investor redemptions, making this an area to monitor. Bond market growth remains robust, with fixed-income issuance rising 12% in 2025, and we expect strong local government bond supply to continue, as debt substitution goes on over 2026 before tapering off in 2027-2028. Source: Fitch Ratings 2026-01-21 hellenicshippingnews... window.___gcfg = {lang: 'en-US'}; (function(w, d, s) { function go(){ var js,