China’s loans tumble as coronavirus lockdowns hold back credit growth
- Chinese banks extended 645.4 billion yuan (US$95.3 billion) in new yuan loans in April, down sharply from March
- Lockdowns to stop the spread of coronavirus outbreaks in dozens of cities, including a citywide shutdown in the commercial hub of Shanghai, have hit the economy
New bank lending in China tumbled in April from the previous month as the coronavirus pandemic jolted the economy and weakened credit demand, even as the central bank pledges to step up policy support to ward off a sharper slowdown.
Chinese banks extended 645.4 billion yuan (US$95.3 billion) in new yuan loans in April, down sharply from March and falling short of analyst expectations, according to data released by the People’s Bank of China (PBOC) on Friday.
Analysts polled by Reuters had predicted new yuan loans would fall to 1.52 trillion yuan in April from 3.13 trillion yuan the previous month and against 1.47 trillion yuan a year earlier.
Lending was much weaker than expected last month as lockdowns weighed on credit demand. This should nudge the PBOC to announce further easing measures soon
“Lending was much weaker than expected last month as lockdowns weighed on credit demand. This should nudge the PBOC to announce further easing measures soon. But the central bank continues to signal a relatively restrained approach,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
“The PBOC pinned the blame for the slowdown on virus disruptions, which have curbed demand for mortgages and private sector investment. Provided that the recent improvement in the virus situation continues, that drag should start to ease this month. Nonetheless, the weak pace of lending in April will increase pressure on the PBOC to do more to support the economy.”