China’s new yuan loans less than expected in August
China's broadest measure of new credit increased in August, suggesting demand for loans is holding up after renewed rounds of monetary easing that followed the stock-market debacle of the past three months.
But banks extended less than expected in new loans last month, as the impact of the government's massive stock market rescue in July faded.
The central bank also said it would tweak the way it assessed banks' reserve ratios, using average levels over a period instead of daily calculations.
The new methodology, to take effect on September 15, could help release liquidity and maintain stability in money markets, the People's Bank of China said.
Aggregate financing rose to 1.08 trillion yuan (HK$1.31 trillion) in August, from 718.8 billion yuan in July, according to a report from the central bank.
"Credit growth is staying on track despite the stock market volatility," said Larry Hu, head of China economics at Macquarie Securities in Hong Kong. "We're going to see a pickup in the fourth quarter" for economic growth.
The credit data offers slight relief to policymakers, as factory deflation deepens to the worst level since 2009 and pushes the real interest rates higher for an industrial sector already hurt by overcapacity and weak demand. Slumping exports and manufacturing may help spur more easing in addition to the rounds that followed the stock-market slide.
New yuan loans fell to 809.6 billion yuan after surging to a six-year high of 1.48 trillion yuan in July on government stock rescue efforts. M2 money supply rose 13.3 per cent from a year earlier. The money supply matched analysts' forecasts, while economists had projected an 850 billion-yuan increase in new loans.
ANZ said the central bank was expected to lower the banks' reserve requirement ratio by another 50 basis points in the fourth quarter to encourage banking lending and maintain liquidity.
"A month-on-month decline of new loans in August wasn't unusual because the record high in new loans last month was just a result of the massive lending to the securities industry for stock market intervention," said Qilu Securities chief strategist Luo Wenbo. "Given the lacklustre auto sales and consumer spending, the big drop was in line with expectations."
The figures showed that companies were still showing a lukewarm response to fresh investments while chasing new growth, said Li Huiyong, chief economist at Shenwan Hongyuan Securities. "The national economy lacked a real driving force based on the current situation. It is expected that policy support will be given to sustain economic growth."
Bloomberg, Reuters
Additional reporting by Daniel Ren
