China bank lending slows more than expected in April, raising concerns about economic outlook
- Banks extended 1.02 trillion yuan (US$150 billion) of new loans in April, below market expectations and down from 1.68 trillion yuan in March
- Slowdown follows fall in April’s purchasing managers’ index as well as exports ahead of latest round of trade talks in Washington and threatened tariff increases
China’s new bank lending slowed more than expected in April, triggering new concerns over the country’s economic outlook and prompting fresh calls for further monetary easing against the backdrop of heightened trade tensions with the United States.
Banks made 1.02 trillion yuan (US$150 billion) of new yuan loans in April, lower than market expectations for 1.2 trillion yuan in loans and the 1.69 trillion yuan in new lending in March, according to data released by the People’s Bank of China (PBOC) on Thursday.
National aggregate financing, a broad measure of credit to the real economy, dropped to 1.36 trillion yuan in April, half the 2.86 trillion yuan from a month earlier. Growth of M2, the widely watched indicator of money supply, slowed to 8.5 per cent at the end of April from 8.6 per cent in March.
The data release came just ahead of the 11th round of China-US trade negotiations due to take place in Washington starting later on Thursday. The talks could decide whether the US raises the tariff rate on US$200 billion of Chinese imports from the 10 per cent to 25 per cent on Friday.
“The latest drop back in credit growth suggests that, as the prop from this year’s front-loading of local government special bond issuance fades, current monetary conditions may not be loose enough to prevent a renewed slowdown in credit growth,” said Julian Evans-Pritchard, a senior China economist at Capital Economics.