Bank of China Limited

Several banks recently announced caps on the overall financing costs of personal loans. State-owned large banks, joint-stock banks, city commercial banks, and rural commercial banks show an overall stepwise increase but with internal divergence. Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank all have an annualized rate cap of 6% for personal consumer loans and business loans, while Postal Savings Bank of China and Bank of Communications set the cap at 12%. Among joint-stock banks, China Merchants Bank, China CITIC Bank, and several others cap their self-operated consumer loans at 12%, Ping An Bank reaches 18.5%, and China Bohai Bank and Evergrowing Bank go up to 24%. For business loans, China Everbright Bank caps at 8%, Huaxia Bank at 10%, Ping An Bank at 20%, and China Bohai Bank at four times the loan prime rate. Among city commercial banks, Qilu Bank, Bank of Jilin, and Qishang Bank set the overall financing cost cap at 18%, while Bank of Chengdu caps self-operated consumer loans and business loans at just 7%. Rural commercial banks show clear divergence: Chongqing Rural Commercial Bank, Shunde Rural Commercial Bank, and Guangzhou Rural Commercial Bank cap consumer loans at 12%, Xiamen Rural Commercial Bank and Zijin Bank go as high as 24%, and Chongqing Rural Commercial Bank also sets a 10% cap for loans to farmers. The cap for cooperative internet loans is generally 24%. These caps take effect from August 1, 2026, and all represent the rate ceiling under normal repayment conditions. Su Xiaorui, senior researcher at Suxi Zhiyan, said that the rate caps correspond to different bank customer segments, and transparent disclosure with tiered stratification is an important sign of a maturing credit market.

The global interest-rate outlook has shifted higher for years to come following Donald Trump’s war against Iran, according to Bloomberg Economics. Its forecasts show borrowing costs elevated by as much as half a percentage point or more through 2028 compared with pre-war projections, both on its global gauge and its measure for advanced economies. The lingering energy shock from the Strait of Hormuz closure is compounding cost-of-living pressures, while central banks remain hawkish even as oil prices recede. The Federal Reserve is now seen cutting rates by just a quarter point by mid-2027 instead of a full percentage point, and the European Central Bank is expected to hike again to a level half a point higher than originally envisaged before easing later.

China’s non-performing household debt surged 21% last year to a record of at least 2.22 trillion yuan, or $329 billion, according to Gavekal Dragonomics, fueling a largely hidden crisis that threatens efforts to revive the world’s second-largest economy. The firm analyzed financial reports from 26 banks and other data sources after authorities stopped releasing aggregate figures, while Zhejiang University’s Institute of Financial Research estimated Chinese financial institutions could have 2 trillion to 3 trillion yuan in non-performing personal debt to dispose of annually. The estimates suggest as much as 10.6% of China’s 1.1 billion adult population were behind on debt payments at the end of 2025, with bad loans from credit cards to mortgages undermining national efforts to boost domestic consumption. Much of the short-term debt boom has been driven by loan platforms operated by tech giants including Ant Group and ByteDance, which continue to aggressively push loans with slogans like “instant disbursement” even as bad debt mounts. Regulators have instructed online platforms to cap average rates on new loans below 20% and asked some major lending platforms to stress test portfolios against a potential 12% annualized rate ceiling, while the People’s Bank of China rolled out a credit-amnesty program offering a one-time window for individuals with up to 10,000 yuan in overdue debt to repair their credit scores.