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China’s structured finance market is expected to remain broadly flat at around RMB2.3 trillion (US$332 billion) in 2026, following a strong 14% rebound in 2025. While the headline number suggests stability, the underlying asset classes are moving in very different directions—creating both opportunity and uncertainty for issuers and investors.
Rather than a synchronized expansion or contraction, 2026 is shaping up as a year of rotation within securitization, with some segments accelerating and others remaining dormant.
What Drove the 2025 Rebound
Total issuance reached RMB2.3 trillion in 2025, supported by strength across all three regulatory regimes:
- CSRC framework: +17% year over year, driven by lease receivables, consumer loans, and SME-related assets
- NAFMII framework: +9.3%, largely from trust-company issuance backed by small-ticket loans
- CAS framework: +8%, with a sharp rise in securitizations backed by nonperforming loans
While reported quasi-REIT issuance declined, adjusted issuance across quasi-REITs and infrastructure REITs exceeded RMB150 billion, underscoring continued investor appetite for yield-oriented real assets.
2026 Issuance Outlook by Asset Class
Quasi-REITs & Infrastructure REITs: A Bright Spot
Issuance is expected to remain robust in 2026, supported by:
- Demand for stable, income-generating assets
- Balance sheet optimization by asset owners
- Faster execution via private placement structures
That said, visibility is lower than in traditional ABS sectors, as fewer transactions are formally rated.
Auto Loan ABS: Poised for a Rebound
After four consecutive years of decline, auto ABS issuance likely bottomed in 2025 at roughly RMB119 billion.
Key tailwinds for 2026 include:
- Regulatory guidance discouraging aggressive bank competition in auto lending
- Gradual recovery in market share for auto finance companies
- Increased reliance on securitization to fund renewed loan growth
However, the rebound may be tempered by slowing vehicle sales, with light vehicle volumes forecast to fall 1%–3% in 2026 following a pull-forward driven surge in 2025.
Credit performance remains solid, with delinquency rates elevated relative to pre-COVID levels but still manageable, supporting stable ratings on senior tranches.
RMBS: Still on the Sidelines
Residential mortgage-backed securities are expected to remain dormant:
- No new issuance in 2025
- No new issuer inquiries
- Weak property sales and reduced bank balance-sheet pressure
Outstanding RMBS continue to amortize, and collateral performance is largely stable due to well-seasoned loan pools. A meaningful restart would likely require several quarters of recovery in property sales and mortgage origination, which appears unlikely in 2026.
Consumer Finance ABS: Regulatory Fog
Direct financing by licensed consumer finance companies—including securitization—has stalled amid evolving regulatory dynamics. While some issuance continues via trust-based structures, overall momentum is weakening.
Combined issuance (ABS plus financial debentures) fell sharply in 2025, and with retail sales growth projected at just 2.7% in 2026, visibility on recovery remains limited.
Equipment Lease ABS: Quietly Consistent
Equipment lease ABS remains one of the market’s most stable pillars, accounting for roughly 15% of total issuance in 2025.
- Issuance volumes have been steady for three years
- Increasing focus on granular, diversified collateral pools
- Credit performance varies by originator strategy but remains manageable overall
More rated transactions are expected in 2026 as the asset class continues to mature.
Bottom Line
China’s structured finance market in 2026 is not about growth versus contraction—it’s about reallocation.
- Strength: Quasi-REITs, infrastructure REITs, auto ABS, equipment lease ABS
- Weakness: RMBS, consumer finance ABS
- Theme: Regulatory influence, sector-specific fundamentals, and investor preference for yield and transparency
For market participants, success in 2026 will depend less on aggregate issuance growth and more on selectivity, structure, and regulatory alignment.
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