2023-08-14 08:20:11
© Reuters. FILE PHOTO: Chinese yuan notes and coins in an illustration taken February 24, 2022. REUTERS/Florence Lo
Por Kevin Yao y Qiaoyi Li
BEIJING, Aug 14 (Reuters) – China’s new bank lending fell in July and other key credit indicators also weakened, despite currency leaders cutting interest rates and pledging more support for the faltering economy.
Chinese banks made 345.9 billion yuan ($47.8 billion) in new yuan loans in July, an 89% drop from June and the lowest level since late 2009, well below forecasts from Analysts showed data from the People’s Bank of China on Friday.
Analysts polled by Reuters had estimated new lending last month to fall sharply from 3.05 trillion yuan in June to 800 billion yuan, after record lending in the first half of the year as the central bank tried to support consumption and investment.
The figure was also well below the 679 billion yuan in July 2022.
While lending in China tends to recede in July for seasonal reasons, the weak credit readings come days after other downbeat data showed the world’s second-largest economy slipped into deflation last month, while exports and imports plummeted, increasing pressure on Beijing to deploy stronger stimulus measures.
“Bank loan growth in China fell to its lowest level in seven months in July, while overall credit growth fell to a record low,” Capital Economics said in a note to clients.
“We anticipate further cuts in official interest rates (as soon as next Tuesday) and a rebound in government bond issuance in the coming months, but unless there is a broader improvement in business confidence and households, this probably won’t lift credit growth much.
Weighted down by weak domestic and foreign demand, China’s economic momentum has faltered in recent months despite strong bank credit in the first half.
Loans to households, mainly mortgages, contracted by 200.7 billion yuan in July, after rising by 963.9 billion yuan in June, as the debt crisis in the real estate sector worsened, while loans to businesses fell to 237.8 billion yuan last month from 2.28 trillion yuan in June, according to central bank data.
In late July, China’s top leaders pledged to step up support for the economy amid a tortuous post-financial crisis recovery, followed by a series of similar pledges from various government agencies. However, details have been scant so far, disappointing investors.
Central bankers have pledged to use policy tools such as lowering the reserve requirement ratio (RRR) to ensure reasonably abundant liquidity.
(Reporting by Qiaoyi Li and Kevin Yao; editing in Spanish by Flora Gómez)
#bank #loans #China #fall #July #credit #growth #falls #Reuters