China’s central bank expected to use ‘variety of tools’ to ensure ample liquidity and reasonable economic growth
- Beijing’s insistence on a tighter monetary approach, as well as more deleveraging, has raised concerns about the national economy
- Analysts expect a gradual improvement of credit to both enterprises and households, as well as further loosening by the central bank
China’s central bank could become more accommodative towards supporting the country’s growth, after new data showed that mortgage lending and the level of local government bonds issued rose last month.
Commercial banks extended 826.2 billion yuan (US$129.3 billion) worth of new loans in October, an increase of 136.4 billion yuan (US$21.34 billion) from a year earlier, according to new data released by the People’s Bank of China (PBOC) on Wednesday.
Aggregate financing, an indicator that measures the country’s overall funding for the real economy, was 1.59 trillion yuan last month – an increase of 197 billion yuan from a year earlier.
Alongside stable lending rates, the central bank also maintained liquidity in the market in support of potentially more issuances of special-purpose bonds, which are instruments used by local governments to raise funds, particularly for construction and projects. The bank’s latest data showed that, in October, local government bond issuance was 123.6 billion yuan higher than it had been a year prior – reaching 616.7 billion yuan.
Meanwhile, the growth of M2, the broad measure of money supply, grew 8.7 per cent last month, 0.4 percentage points higher than a month earlier.