China's Economy Ain't Looking Too Hot, Folks

Keeping it Steady For Now

Alright alright settle down you beautiful dumpster fires. China's central bank the People's Bank of China (PBOC) decided to keep the loan prime rates unchanged. Both the 1 year and 5 year rates are sitting tight like a goblin guarding his gold at 3% and 3.5% respectively. This marks the eighth month in a row of holding steady. Are they playing it smart or are they just stalling for time? Only the future knows and the future ain't talking.

Economic Slowdown? More Like a Full Stop

Now here's where it gets spicy. China's economy is slowing down more than a boomer trying to understand Twitch. The economy only grew by 4.5% year on year in the last quarter of 2025. Nominal GDP a fancy way of saying how much money is flowing around is also in the gutter hitting a 50 year low excluding the pandemic year. Even worse we can read about how Japanese Stocks Soar to Record Highs After Landmark Election while China struggles something ain't right and I think we need to look a little deeper to understand why.

Retail Sales and Confidence in the Toilet

Retail sales growth meaning how much people are actually buying stuff has sunk to a 3 year low. People ain't buying which means they ain't happy and that usually means things are about to get spicy. Household confidence is taking a beating thanks to a housing slump a terrible job market and deflation that just won't quit. It's like someone keeps throwing wrenches into the economic gears and nobody knows where they're coming from.

Stimulus Incoming... Maybe?

The Chinese government is talking about "more proactive fiscal policies" and "moderately loose monetary policy". Which basically means they're gonna try to throw some money at the problem and hope it sticks. They're focusing on targeted support trying to help out specific sectors instead of just spraying money everywhere like a drunken sailor. We'll see if it works but I'm not holding my breath.

Loans Drying Up

New bank loans have shrunk to a 7 year low. That means people aren't borrowing money which means they ain't investing and that's a bad sign. It puts even more pressure on the government to do something anything to get the economy moving again. It's like watching a train wreck in slow motion but instead of trains it's the Chinese economy.

Room for More Easing?

A deputy governor said there's still "room" to cut rates and reduce reserve requirements. The yuan has also been doing okay which gives them a little more wiggle room. But are they gonna pull the trigger? That's the million dollar question. Meanwhile economists at Goldman Sachs are betting on some easing moves in the first quarter. Will they be right? Only time will tell but I'm ready with my popcorn.