The interest margin in China's banking sector has dropped to a historic low, and loans are starting to shrink. The net interest margin of China's banking sector has fallen to around 1.4%, hitting a historic low and narrowing by nearly half compared to around 2012. The space for banks to earn interest income through loans and bonds is getting smaller and smaller. At the same time, the willingness of businesses and households to borrow money has not shown a significant recovery. In July, net RMB loans decreased by more than 340 billion yuan, marking the largest single-month decline on record. While monthly data can be affected by seasonal factors, the negative net loan growth at least indicates that there aren't many people willing to take on more debt right now. For businesses, lower interest rates only make borrowing cheaper, but the key question is whether they can make money. If there aren't enough orders and expanding production doesn't promise returns, companies won't take on more debt just because borrowing is cheaper. The same goes for households. Lower mortgage rates can certainly reduce interest expenses, but if there's not enough confidence in income growth, the willingness to buy homes or increase consumption won't return immediately. Currently, China's credit impulse, a key market focus, is also at a very low level. This indicator mainly measures whether new financing relative to the size of the economy is accelerating or decelerating. The lower the value, the weaker the boost that new credit provides to investment and consumption. This could also impact markets outside of China. If companies reduce production expansion and equipment purchases, demand for raw materials and imported goods will also decline, ultimately affecting commodities, global manufacturing, and some countries that export to China. China is currently injecting about 360 billion yuan of capital into eight major banks and insurance institutions, aiming to enhance their ability to continue lending and investing. This capital injection can improve the financial institutions' capital conditions and enhance banks' ability to lend. However, the real determinant of whether credit can grow again lies in the borrowing willingness of businesses and households. If corporate orders don't improve and household income expectations don't recover, even if banks have more funds to lend, loan demand may not return immediately. @Gate Crypto, US stocks, Hong Kong stocks, Korean stocks, gold, CFD, prediction markets, one-stop trading