China cut funding costs for share buybacks and raised banks’ foreign-currency reserve requirement after renminbi appreciation. Earnings diverged, with the six largest state-owned banks reporting profit growth while insurers and securities firms faced weaker investment returns.

Also this week, October’s official manufacturing PMI fell to 49.3, returning to contraction as production and new orders weakened. Non-manufacturing activity also contracted, with construction slowing sharply and services stagnating.

Read more on the week's key developments:

1. PBOC cuts share buyback relending rate to 1% and adopts long-term arrangement

The People’s Bank of China (PBOC) lowered its share buyback and stake-increase relending rate from 1.25% to 1%, effective 4 November, as regulators announced a long-term arrangement for the programme. Under the facility, banks lend to listed companies and major shareholders to finance share purchases, then obtain central bank funding equivalent to the full loan amount. Banks add a margin to the PBOC rate when pricing borrowers’ loans and retain the credit risk.

The cut makes this funding cheaper, while the long-term arrangement extends support beyond a temporary intervention. Banks applied for more than CNY 200 billion ($30.0 billion) in funding quotas following a 2 November meeting. They have signed approximately CNY 440 billion ($65.9 billion) in loans since the programme began, although disbursements remain lower at more than CNY 280 billion ($42.0 billion).

2. PBOC raises foreign-currency reserve requirement to 6% after renminbi appreciation

The PBOC announced on 3 November that financial institutions’ foreign-currency deposit reserve requirement would rise by two percentage points to 6%, effective 15 November. It described the adjustment as a measure to strengthen foreign-exchange liquidity management. The decision followed renminbi appreciation, with the onshore spot currency strengthening beyond 6.65 per dollar by 2 November.

The increase requires banks to hold a larger share of foreign-currency deposits in reserve, reducing funds available for lending, investment or sale. It reverses the September 2023 reduction from 6% to 4%, when the central bank sought to improve banks’ ability to deploy foreign-currency funds. The adjustment is the first increase since December 2021 and applies separately from banks’ renminbi reserve requirements.

3. China’s largest state-owned banks report profit growth as margins stabilise

China’s six largest state-owned banks reported higher nine-month attributable profits, with Agricultural Bank recording the fastest growth at 7.10% and Postal Savings Bank the slowest at 4.56%. ICBC’s profit rose 5.83% to CNY 285.64 billion ($42.8 billion), while its net interest margin increased one basis point year-on-year to 1.29%. ICBC nevertheless increased asset impairment charges by 19.65%.

Across all 42 A-share listed banks, combined nine-month revenue reached approximately CNY 4.66 trillion ($698.4 billion) and attributable profit CNY 1.75 trillion ($262.3 billion). Western Securities’ 31 October review calculated revenue growth of 7.8% and profit growth of 3.8%. It estimated average net interest margin at 1.41%, unchanged from the first half, identifying deposit repricing as a factor supporting stabilisation. The aggregate improvement masked weaker individual results, with Bank of Shanghai and China Everbright Bank reporting profit declines exceeding 20%.

4. China Life drives CNY 40.8 billion quarterly loss across five major insurers

China Life, Ping An, China Pacific, PICC and New China Life recorded a combined third-quarter loss attributable to shareholders of CNY 40.81 billion ($6.1 billion). China Life accounted for the largest loss at CNY 45.06 billion ($6.8 billion), while PICC and New China Life also reported losses. Ping An and China Pacific remained profitable. Across the five groups, nine-month attributable profit totalled CNY 276.58 billion ($41.5 billion).

China Life attributed the deterioration to short-term capital-market fluctuations and a high comparison base. The quarterly losses contrasted with growth in several operating measures. Ping An’s nine-month attributable operating profit increased 8.3%, while China Pacific’s rose 5.6%. China Life reported 15.8% growth in profit adjusted for specified short-term market fluctuations and 13.1% growth in new business value. Ping An also attributed its sharp quarterly profit decline to capital-market volatility.

5. Securities firms’ quarterly profit falls 16.9% as proprietary investment income weakens

Quarterly attributable profit at China’s 42 listed securities firms fell 16.9% year-on-year, according to CSC Financial’s 1 November review. The decline contrasted with stronger cumulative results: GF Securities calculated nine-month revenue growth of 18.7% to CNY 497.9 billion ($74.6 billion) and attributable-profit growth of 23.8% to CNY 209.2 billion ($31.4 billion).

CSC Financial identified proprietary investment income as the main quarterly drag, with net income from that business falling to CNY 34.9 billion ($5.2 billion) from CNY 74.5 billion ($11.2 billion) a year earlier. Other businesses were more resilient: brokerage income declined only slightly, while investment banking and asset management maintained double-digit quarterly growth.

6. China’s manufacturing PMI returns to contraction as orders and construction weaken

China’s official manufacturing purchasing managers’ index fell to 49.3 in October from 50.1 in September, according to the 31 October release. Production and new orders both moved below the 50 threshold, reaching 49.8 and 49.4, respectively. The National Bureau of Statistics cited demand brought forward before the National Day holiday and a complex international environment among the factors affecting manufacturing.

The weakness was uneven. Large manufacturers remained in expansion at 50.2, while medium-sized and small firms recorded 48.4 and 47.5. The non-manufacturing business activity index fell to 49.7 from 50.2, with construction dropping to 48.0 from 50.3 and services standing at 50.0. Weaker order books may weigh on manufacturers’ appetite for expansion financing.

7. China reports 92% fall in LGFV numbers as commercial transformation remains a priority

The number of entities remaining in the local-government financing vehicle (LGFV) category had fallen 92% from March 2023 by September 2026, according to the State Council’s financial work report presented by PBOC governor Pan Gongsheng on 3 November. The report identified support for vehicles’ commercial transformation after exit from the category as a continuing priority.

The report also identified continued risk handling at smaller financial institutions and regular operation of the property-project “white list” financing mechanism as priorities. Banks had cumulatively approved more than CNY 8.4 trillion ($1.26 trillion) in lending through the mechanism, which supports eligible property projects. The figure represents approved lending rather than disbursements.

8. NFRA tightens trust investment and distribution requirements from January

The National Financial Regulatory Administration published its asset management trust rules on 30 October, effective 1 January 2027. Products must be privately offered to qualified investors, with no more than 200 investors per product. The framework prohibits public marketing, fund pools and arrangements designed to circumvent regulatory requirements, while strengthening suitability checks, investment management and disclosure.

Trust companies, commercial banks, insurers and securities companies remain permitted distributors. Trust companies must retain management responsibility and cannot hand investment decisions to investors or advisers. Article 48 generally limits investment in a single asset or asset management product to 25% of a product’s net assets, subject to specified exemptions. The rules replace the earlier collective fund trust framework. New business must comply from 1 January, while existing non-compliant products are subject to specified remediation arrangements.

9. China’s technology bond issuance reaches CNY 3.3 trillion as manufacturing financing rules widen support

Cumulative science and technology innovation bond issuance reached CNY 3.3 trillion ($494.6 billion) following the launch of the bond market’s technology board in May 2025, according to the State Council’s financial work report presented on 3 November. The report identified further development of the market and stronger credit-enhancement arrangements for private small and medium-sized enterprises as priorities. Eligible equity investment institutions can use the framework to raise bond funding for investments through funds and equity stakes.

Separately, advanced-manufacturing financing rules issued by the National Association of Financial Market Institutional Investors on 4 November call for greater use of the technology-innovation and private-enterprise bond risk-sharing tool, alongside credit risk mitigation warrants and guarantees. Permitted uses of proceeds include research and development, project construction, and eligible equity investments or fund contributions.

10. Bank of Guizhou proposes taking over deposits from 10 village banks

Bank of Guizhou proposed on 3 November to assume deposits, related bank-card business and branch services from 10 village banks it sponsors, while accommodating their employees. The proposal requires shareholder and relevant regulatory approvals, with shareholders scheduled to consider it on 18 November. The bank has sponsored 13 village banks, three of which had already completed reform.

Under the proposal, the 10 institutions would establish trusts using monetary assets and rights to income from non-monetary assets. Bank of Guizhou would receive beneficial interests in those trusts as consideration for assuming the deposits and would manage the underlying assets on an entrusted basis. The proposal extends a structure used when Bank of Guizhou assumed the deposits of Longli Guofeng Village Bank, another institution it sponsored, in January 2026.

What to watch

October consumer and producer price figures due on 9 November will provide fresh evidence on inflation pressures ahead of the 20 November loan prime rate fixing.

Industrial production, retail sales, investment and property data follow on 16 November, testing whether the weakness in October’s PMIs extends to activity and the outlook for credit demand.

Asia-Pacific Economic Cooperation (APEC) leaders meet in Shenzhen on 18–19 November, with trade and investment announcements relevant to cross-border business.