South China Morning Post
Advertisement
Advertisement
China economy
Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more
In a surprise, the growth of broad M2 money supply – an indicator of money supply and future inflation – slowed to 8.2 per cent in November from a year earlier, below the expectation of an unchanged growth rate of 8.4 per cent. Photo: AP
EconomyChina Economy

China new bank lending rebounds sharply in November after October’s holiday lull in activity

  • Chinese banks extended 1.39 billion yuan (US$197.46 billion) in new yuan-denominated loans in November, doubling October’s figure
  • Bank lending in China traditionally rebounds in November, since the week-long National Day holiday in the first week of October dampens banks’ lending business
China economy
Orange Wang
Orange Wang
Why you can trust SCMP

Chinese new bank lending rose sharply in November, rebounding from a near two-year low in October that was due in part to the effects of a week-long holiday on bank activity.

Chinese banks extended 1.39 billion yuan (US$197.46 billion) in new yuan-denominated loans in November, double the 661.3 billion yuan (US$94 billion) in new loans in October, which was the weakest reading since December 2017, according to data released by the People’s Bank of China on Tuesday. The gain last month also exceeded analysts’ expectation for 1.2 trillion yuan in new lending, according to a Bloomberg survey.
Bank lending in China traditionally rebounds in November, since the week-long National Day holiday in the first week of October dampens banks’ lending business. New loans in last month were nominally up by 11.2 per cent on the 1.25 trillion yuan over the same month last year.

New household loans, mostly mortgages, rose to 683.1 billion yuan in November from 421 billion yuan (US$60 billion) in October, new corporate loans jumped to 679.4 billion yuan from 126.2 billion yuan.

The government in Beijing has enacted a series of measures over the past year to boost investment in local government infrastructure and lending to smaller private sector businesses to stabilise growth and employment. However, the Chinese central bank has held back from cutting its new benchmark lending rate aggressively as a means of boosting lending, trimming it by only 5 basis points three weeks ago.

Li Chao, chief macro analyst at Huatai Securities, wrote in a note on Saturday that the Chinese central bank was likely to conduct more targeted cuts in banks’ reserve requirements – the share of cash that financial institutions must hold in reserve – to boost liquidity in the banking system and so increase lending.

“Given the special meaning of 2020, ensuring a certain pace of economic growth is likely to remain at the heart of China’s fiscal and monetary policies,” he said, referring to Beijing’s goal of achieving a “moderately prosperous society” next year by doubling the size of the economy compared with 2010. Most economists believe that this will require growth of at least 5.8 per cent next year.

Local governments issued a total of 4.32 trillion yuan (US$614 billion) worth of new bonds in the January to November period to fund their operations, of which 2.13 trillion yuan were new special-purpose bonds the proceeds of which must be used to fund infrastructure projects.

As a result, total social financing (TSF), a broad measure credit and liquidity in the economy, increased by 1.75 trillion yuan in November, nearly three times the 618.9 billion yuan increase in October, the lowest since July 2016, and above the 1.485 trillion yuan expected by the market. Annual growth in outstanding TSF remained at 10.7 per cent in November.

In a surprise, the growth of broad M2 money supply – an indicator of money supply and future inflation – slowed to 8.2 per cent in November from a year earlier, below the expectation of an unchanged growth rate of 8.4 per cent.

Post