Report Overview

The growing PE/AIF participation, surging financial demand in infrastructure and real estate development projects, and the widening SME credit gap are expected to drive China Private Credit Market during the forecast period between 2025 and 2031.

China Private Credit Market – Industry Trends & Forecast Report, 2031

China Private Credit Market was estimated at USD 51.53 billion in 2024. During the forecast period between 2025 and 2031, China Private Credit Market size is projected to grow at a CAGR of 7.37% reaching a value of USD 84.76 billion by 2031. Prominent drivers of China Private Credit Market include resilient economic fundamentals, easing inflation, and the rising need for alternative financing as traditional bank lending slows. The country’s stable macroeconomic environment, marked by a 5.2% GDP growth (YoY) during the second half of 2025, and a 0.2% inflation rate (YoY) in October 2025, has created a favorable credit environment. This backdrop has spurred a remarkable surge in private credit activity driven by a maturing market where investors are increasingly focused on risk management and targeted returns, and by a robust supply-side momentum from both global and domestic funds. Regulatory reforms are further strengthening China Private Credit Market, positioning private credit to become a significant asset class that fills crucial funding gaps in the mid-market, infrastructure, and real estate sectors. China Private Credit Market is evolving into a mainstream asset class, backed by increasing investor participation, diversification into distressed debt and mezzanine financing, and structural funding gaps in mid-market and infrastructure lending, positioning the sector for sustained growth within the global private credit landscape.

Source: BlueWeave Consulting

Private Credit – Overview

Private credit refers to non-bank lending where funds, asset managers, or financial institutions provide debt directly to companies, often in the form of direct lending, mezzanine financing, distressed debt, or structured credit. It offers flexible capital solutions outside traditional banking, catering to small and medium-sized enterprises (SMEs), corporates, and specialized projects.

China Private Credit Market

Growth Drivers

Demand in Infrastructure Development Projects

China’s infrastructure and real estate sectors are experiencing strong momentum, significantly elevating the need for alternative financing. Evolving into large-scale material and technology-driven platforms that cater to diverse projects across metros and emerging cities. The ongoing wave of construction—from airports and metro networks to highways and housing—continues to widen the demand for tailored credit solutions. Meanwhile, real estate growth remains resilient, supported by rising luxury housing sales, record office space absorption, and expanding retail and data center developments. Increasing foreign private equity participation and favorable policy measures further reinforce market confidence. Together, these trends are fueling a surge in private credit opportunities, with lenders stepping in to bridge financing gaps and provide flexible capital to developers, infrastructure companies, and enterprises driving China Private Credit Market.

Challenges

Rising Capital Cost

The rising cost of capital could be a significant restraint to the growth of China Private Credit Market. Elevated interest rates, inflationary pressures, and tighter monetary policies have increased borrowing costs for businesses across sectors. Small and medium enterprises, in particular, face challenges in accessing affordable financing, limiting their ability to expand operations or invest in growth initiatives. Higher costs also reduce the attractiveness of private credit compared to traditional financing channels, impacting deal flow and investor confidence. Consequently, the growing cost of capital acts as a barrier, slowing momentum in private credit deployment across infrastructure, real estate, and corporate financing.

Impact of Escalating Geopolitical Tensions on China Private Credit Market

Escalating geopolitical tensions between China and United States could significantly impact the growth of China Private Credit Market by creating economic uncertainty, disrupting trade flows, and triggering volatility in global capital markets. Such instability often leads to currency fluctuations, rising commodity prices, and increased inflationary pressures, all of which elevate the cost of borrowing. Investors may become risk-averse, slowing capital inflows into private credit and tightening liquidity for businesses. Sectors reliant on imports, exports, and infrastructure financing face heightened challenges, while SMEs and startups encounter limited funding access. Overall, geopolitical uncertainties weaken investor sentiment, delaying transactions and restraining growth potential of China Private Credit Market.

China Private Credit Market

Segmental Coverage

China Private Credit Market – By Instrument Type

Based on instrument type, China Private Credit Market is divided into Direct Lending, Mezzanine Financing, Distressed/Special Situations, Structured Credit, and Unitranche Loans segments. The direct lending segment holds the largest share in China Private Credit Market by instrument type. In China, large corporates, mid-market firms, and stressed businesses are increasingly opting for direct loans as banks tighten their lending norms. Flexible structures, faster execution, and the ability to cater to both performing and distressed credit needs make direct lending the preferred instrument. Its prominence reflects growing investor appetite and sustained borrower demand across sectors such as infrastructure, real estate, and manufacturing. Meanwhile, the mezzanine financing segment is expected to witness fastest growth rate during the forecast period. Mezzanine financing, a hybrid of debt and equity, is emerging as the fastest-growing segment in China Private Credit Market. Its flexibility makes it highly attractive for businesses seeking growth capital, acquisitions, or expansion without diluting full ownership. Increasingly, SMEs, startups, and real estate developers are turning to mezzanine financing for quicker access to funds compared to traditional lending routes. The strong appetite from private equity firms, venture capitalists, and hedge funds further supports its momentum. Despite higher costs and repayment pressures, mezzanine financing’s ability to balance risk and return positions it for rapid expansion throughout the forecast period.

Source: BlueWeave Consulting

China Private Credit Market – By Borrower Type

China Private Credit Market by borrower type is divided into Small & Medium-sized Enterprises (SMEs), Large Corporates, Real Estate Developers, Infrastructure & Project Financing, and Startups & New-Economy Businesses segments. The large corporates segment accounts for the largest share of China Private Credit Market by borrower type, reflecting their central role in driving the growth of alternative financing in the country. Large corporates increasingly rely on private credit to meet diverse funding needs, including expansion, acquisitions, refinancing, working capital, and project financing, leveraging flexible structures, such as non-convertible debentures, bonds, and term loans that are often unavailable through traditional banks and NBFCs. The growing presence of large private credit funds has enabled multibillion-dollar loans to established firms across various sectors, including infrastructure, real estate, pharmaceuticals, manufacturing, and renewable energy, underscoring the market’s depth and maturity. While SMEs, startups, and new-economy businesses are also tapping into private credit for growth and innovation, large corporates consistently command the largest share due to their ability to manage substantial debt and complex funding requirements. This trend is further supported by regulatory reforms that are broadening the domestic and offshore investor base. Overall, private credit is emerging as a critical enabler of corporate growth in China, with large corporates at the forefront, benefiting from the combination of flexible financing, higher returns, and strategic capital solutions that continue to make the market increasingly attractive and robust.

China Private Credit Market – By End Use

Based on end use, China Private Credit Market is segmented into Real Estate, Infrastructure (Energy, Transport, Utilities), Manufacturing & Industrials, Healthcare & Pharmaceuticals, Technology & Startups, and Consumer & Retail.

Competitive Landscape

Major players operating in China Private Credit Market include CDH Private Credit, China Resources Trust, Ping An Trust, CITIC  Trust, China Cinda AMC, China Construction Bank (CCB), Sichuan Trust, China Orient AMC, and Zhongzhi Enterprise Group (Zhongrong Trust). To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In 2025, CDH Private Credit stated that it provides private credit to data centers, like Yovole Networks, and non-performing assets (Shanghai Wensheng).

Scope of the Report

By Instrument Type

• Direct Lending

• Mezzanine Financing

• Distressed/Special Situations

• Structured Credit

• Unitranche Loans

By Borrower Type

• Small & Medium-sized Enterprises (SMEs)

• Large Corporates

• Real Estate Developers

• Infrastructure & Project Financing

• Startups & New-Economy Businesses

By End Use

• Real Estate

• Infrastructure (Energy, Transport, Utilities)

• Manufacturing & Industrials

• Healthcare & Pharmaceuticals

• Technology & Startups

• Consumer & Retail