BEIJING: China’s new yuan loans are expected to fall sharply in October from September, a Reuters poll showed on Friday (Nov 8), signalling weak credit demand even as the central bank ramps up policy stimulus to buttress the economy.
Banks likely issued 700 billion yuan (US$97.86 billion) in net new yuan loans last month, the median of 19 economist estimates showed, down from September’s 1.59 trillion yuan.
That was also lower than the 738.4 billion yuan issued in the same month a year earlier.
In late September, China’s central bank unveiled an aggressive stimulus package including rate cuts and Chinese leaders pledged “necessary fiscal spending” to bring the economy back on track to meet a growth target of about 5 per cent.
Analysts expect credit demand to stay weak in October even as the central bank steps up policy stimulus, although they believe there could be some improvements in business sentiment.
“Mortgage repricing happened only at end-October, and household long-term loans may not really stage a rebound,” analysts at Citi said in a note. “Corporate credit demand could stay soft, with bill discount rate trending lower during October.”
Banks doled out 16.02 trillion yuan in new loans in the first nine months of the year, versus 19.75 trillion yuan a year earlier.
China’s economy has lost momentum since the second quarter, but policymakers have been working to arrest further weakness from a prolonged property market downturn and swelling local government debt.
Chinese lawmakers are reviewing a cabinet bill this week that would raise ceilings on local government debt to replace existing hidden debt at a week-long meeting by the standing committee of China’s top legislature. The package is expected to be announced later on Friday.
That follows Minister of Finance Lan Foan’s announcement last month that China would “significantly increase” government
