Banking & Finance

China’s credit growth surpasses analysts’ estimates in September despite curbs on borrowing

Aggregate financing rises 23pc from August to 1.82 trillion yuan, central bank says

PUBLISHED : Saturday, 14 October, 2017, 12:18pm
UPDATED : Saturday, 14 October, 2017, 12:18pm

China’s broadest gauge of new credit exceeded projections in September, signalling that the funding taps remain open even as the government pushes to curb excessive borrowing.

Key points

Aggregate financing stood at 1.82 trillion yuan (US$276.91 billion) in September, the People’s Bank of China said on Saturday, compared with an estimated 1.57 trillion yuan in a Bloomberg survey and up 23 per cent from 1.48 trillion yuan in August.

New yuan loans stood at 1.27 trillion yuan, versus a projected 1.2 trillion yuan.

The broad M2 money supply rose by 9.2 per cent, exceeding estimates and picking up from the prior record low.

Big picture

Policymakers have been clamping down on shadow banking while also working to keep corporate borrowing intact to avoid impeding growth.

The central bank said on September 30 it would from next year reduce the amount of cash some banks are required to hold as reserves, with the size of the cut linked to their lending to parts of the economy where credit is scarce.

China’s central bank cuts reserve requirement ratio to spur lending

Economist takeaways

“Momentum continues to be very strong,” Kenneth Courtis, chairman of Starfort Investment Holdings and a former Asia vice-chairman for Goldman Sachs, said. “Loan demand of the private sector has finally turned up in recent months.”

“This means that there is little hope of further policy easing in the fourth quarter as the monetary policy is very accommodative,” said Zhou Hao, an economist at Commerzbank AG in Singapore. “There could be even a tightening bias.”

The details

Household short-term loans rose by 1.53 trillion yuan in September, up from 524.7 billion yuan in same period of last year.

Outstanding aggregate financing rose 13 per cent in the month to 171.2 trillion yuan.