Chinese banks are increasingly turning to government bonds to boost returns as the loan market weakens. New data from the People's Bank of China shows claims on the government reached 16.4% of total assets in July, up from 11.5% five years ago. Meanwhile, the share of resident loans, typically more profitable, fell to 16.4% from 20.3% over the same period.

This shift reflects a challenging environment for traditional lending, prompting banks to seek safer, more liquid investments.