China seeks economic, political stability with the ‘vigour of an uncaged tiger’ as loans soar
- Chinese banks extended a record monthly high of 3.98 trillion yuan (US$626 billion) in new loans in January, representing a year-on-year increase of 11.5 per cent
- It cut two major policy rates last month to reflect mounting pressure for pro-growth measures after the economic growth rate slowed to 4 per cent in the fourth quarter
China is making efforts to stabilise the economy and ensure political stability ahead of a key high-level leadership meeting with the “vigour of an uncaged tiger” by allowing bank lending to hit a record high last month.
January bank lending in China is often high as lenders tend to front-load loans at the beginning of the year, while it is also an indication of the government’s stance for the whole year.
Last month, banks in China extended a record monthly high of 3.98 trillion yuan (US$626 billion) in new loans, a year-on-year increase of 11.5 per cent, the People’s Bank of China (PBOC) said on Thursday, up from 1.13 trillion yuan in December.
After unprecedented tightening in 2021, China is refocusing on ensuring reasonable growth with wide-ranging policy initiatives
“After unprecedented tightening in 2021, China is refocusing on ensuring reasonable growth with wide-ranging policy initiatives,” said Morgan Stanley economists led by Robin Xing.
“We see it as the return of credit and fiscal impulse, calibration of regulatory reset, and a gradual shift from Covid-zero to Covid-light, fuelling the economy with the vigour of an uncaged tiger.”
“A new easing cycle has started since the policy pivot in the Politburo meeting last December,” said Larry Hu, chief China economist at Macquarie Capital.
It is in stark contrast to the United States, where the US Federal Reserve is under pressure to increase interest rates after inflation hit a 40-year high of 7.5 per cent in January.