China economy: banks extended record 3.58 trillion yuan in new loans in January
- Chinese banks made a record 3.58 trillion yuan (US$555 billion) in new loans in January, up from 1.26 trillion yuan in the previous month and 3.34 trillion yuan a year earlier
- Broad M2 money supply in January grew 9.4 per cent from a year earlier, central bank data showed on Tuesday
China’s new bank loans surged to new highs in January boosted by seasonal demand, while broad credit growth slowed, as the central bank walks a tightrope between supporting a recovering economy and rising debt risks.
Banks extended 3.58 trillion yuan (US$555 billion) in new loans in January, hitting the highest on record and topping the 3.34 trillion yuan seen in January 2020, according to data released by the People’s Bank of China (PBOC) on Tuesday.
Chinese lenders tend to front-load loans at the beginning of the year to get higher-quality customers and win market share.
January’s net new credit figures are usually the highest of the year, so this high level doesn’t signify much. It makes more sense to focus on the year-on-year change in the outstanding amounts to gauge the underlying trend
“January’s net new credit figures are usually the highest of the year, so this high level doesn’t signify much. It makes more sense to focus on the year-on-year change in the outstanding amounts to gauge the underlying trend. On this basis, bank loan growth slowed from 12.8 per cent year on year to 12.7 per cent,” said economists Sheana Yue and Mark Williams from Capital Economics.