Still no sign of lending bump from China’s steps to offset trade war
Central bank expected ease monetary further after no signs of new life from efforts to boost bank financing and stabilise growth
China eased up on its 2½-year campaign to reduce financial risks so that it could stabilise growth in face of the escalating trade war with the United States, but the results so far have been disappointing.
Credit growth hit a fresh record low in August while banks made fewer new loans, highlighting the difficulty faced by the People’s Bank of China in getting the financial system to translate the extra liquidity it is adding into financing to support the economy.
With US President Donald Trump threatening to impose tariffs on virtually all Chinese products imported into the US, China has switched to a pro-growth policy tone that allows additional infrastructure spending and a modestly more generous monetary policy.
The net growth of total social financing (TSF) – a broad measure of credit and liquidity in the economy that includes loans, bonds and other non-traditional instruments – rose to 1.52 trillion yuan (US$222 billion) in August from 1.04 trillion yuan in July, beating the market consensus for a gain to 1.3 trillion yuan, according to the data released by the central bank on Wednesday.
But most of the rise was due to a surge in new corporate bond financing, which rose to 337.6 billion yuan last month from the 223.7 billion yuan in July and accounted for about a quarter of the monthly expansion of total financing.