China

On July 15, 2026, the People's Bank of China conducted a 1.4 trillion yuan six-month outright reverse repo, the largest single operation since the tool launched in October 2024, resulting in a net 500 billion yuan liquidity injection after offsetting maturities. Chinese analysts broadly interpret the move as a deliberate effort to reduce interbank funding costs ahead of the July 20 Loan Prime Rate decision, while stopping short of a formal rate cut. The base case in private Chinese bank commentary holds that the LPR will remain unchanged for a 14th consecutive month, with the liquidity operation serving as a substitute for rate action given historically compressed bank net interest margins.

China's June 2026 activity data show industrial output accelerating to 5.3% year-on-year growth while fixed-asset investment contracted 5.7% in the first half, the deepest decline since the early pandemic period. Retail sales posted a 1.0% rebound driven almost entirely by smartphone trade-in subsidies, while autos, appliances, and furniture all fell in double digits. Real estate development investment dropped 18.0% in the first half, marking a fifth consecutive year of sector decline, with Fitch Ratings forecasting new-home sales to fall a further 11–13% in 2026.