China issues record new loans in the first quarter of 2019 as Beijing battles slowing economy amid trade war
- Chinese banks issued a record US$865 billion of new loans in the first quarter of 2019
- In March, banks issued US$251 billion in loans, the second highest behind only March 2009
China’s efforts to battle its slowing economy amid the trade war with the United States gathered pace at the start of 2019 with banks issuing a record amount of new loans in the first quarter of the year.
Banks issued 5.81 trillion yuan (US$865 billion) of new loans between January to March, beating last year’s previous high of 4.86 trillion yuan, the People’s Bank of China said on Friday.
In March alone, banks issued 1.69 trillion yuan (US$251 billion) in loans, which was the second highest behind only March 2009 when China was at the peak of rolling out an all-out stimulus programme which engineered a rebound in China’s economic growth but also left the country with a huge debt hangover.
Strong bank credit lending, along with other financial support such as local government special purpose bond issuance, is a key parts of Beijing’s policy mix to keep its economy from sliding amid the trade war with the United States.
The pace of policy easing needs to be well managed to avoid overshooting. Policymaker should spare more efforts to improve the monetary policy transmission mechanism and fulfil the just announced tax cut.
While China’s National Bureau of Statistic is expected to release the gross domestic product growth rate for the first quarter next week to show whether the government has been able to put economic growth on a solid footing, there are growing signs that the world’s second largest economy in the short term might be performing stronger than expected.