China’s new bank loans nearly triple in May as Beijing steps up policy support
- Household loans and money borrowed by corporations increased massively last month, after financial authorities ordered commercial banks to speed up lending
- Policymakers are determined to reverse a coronavirus-induced economic slump, but analysts say both lenders and potential borrowers remain wary of further disruptions
New bank lending in China surged far more than expected in May, and broader credit growth also quickened, as policymakers attempted to reverse a sharp, coronavirus-induced economic slump.
Chinese banks extended a whopping 1.89 trillion yuan (US$282.6 billion) in new yuan loans in May, nearly tripling April’s tally and handily beating expectations, according to data released by the People’s Bank of China on Friday.
Household loans, including mortgages, rose to 288.8 billion yuan in May, after contracting by 217 billion yuan in April, while corporate loans soared to 1.53 trillion yuan in May from 578.4 billion yuan in April.
“Credit growth was stronger than expected last month and is likely to accelerate further following the clear signal in late May that policymakers want banks to step up lending,” said Mark Williams, chief Asia economist at Capital Economics.
“More policy easing is likely. But private sector credit demand is likely to remain subdued while, on current budgetary plans, local government borrowing is about to slow. A dramatic increase in credit growth still seems unlikely.”
Chinese policymakers have stepped up support for the slowing economy as Shanghai and other cities ease coronavirus lockdowns following a drop in new infections.