China’s banks defy Beijing by pumping loans into property, despite economic slowdown
- About half of new loans issued by China’s big six banks last year went to individual property buyers, despite Beijing’s orders to lend to private companies
- Total business loans fell by half in 2018, while individual housing loans only slowed by 6.3 per cent
Despite Beijing’s push for state-owned banks to lend more to private companies, half of new loans issued by China’s big six banks last year went to individual property buyers.
Data retrieved through a South China Morning Post analysis of the banks’ reported annual results underscores the challenges faced by Beijing in guiding more money into the real economy, amid mounting worries about higher household debt and a new housing bubble.
In total, China’s six largest state-owned banks issued 2.53 trillion yuan (US$376.1 billion) in new personal housing mortgages in 2018, accounting for 49.4 per cent of total new loans (5.13 trillion yuan).
By contrast, just 29 per cent of total loans issued last year went to private businesses, a sharp drop from 57.5 per cent in 2017. Within that, almost one-third of new business loans were for real estate enterprises, which borrowed 8.7 per cent of all new loans in 2018.