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China’s new yuan loans in January set to hit record high

  • New loans in January at 3.69,000,000 yuan compared to 1.13,000,000 yuan in December
  • Money supply growth in January at 9.2% over one year compared to 9.0% in December
  • Jan TSF seen at 5.46 trillion yuan from 2.37 trillion yuan in December
  • Loans, money supply data due February 10-15

BEIJING, Feb 8 (Reuters) – China’s new yuan lending likely hit a record high in January, and money supply growth is also expected to pick up as the central bank seeks to support slowing growth in the world’s second largest economy.

Chinese banks tend to make loans early in the year to get better quality customers and gain market share.

Banks are estimated to have issued 3.69 trillion yuan ($580.30 billion) in net new yuan loans last month, more than tripling from 1.13 trillion yuan in December, according to the median estimate of the survey of 18 economists.

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This would surpass a monthly record of 3.58 trillion yuan in January 2021.

China’s economy has cooled over the past year and faces multiple headwinds as a real estate slowdown hurts investment and the country’s efforts to contain local cases of the highly contagious variant of Omicron weigh on consumption.

The central bank has cut reserve requirement ratios (RRRs) for banks and benchmark lending rates, and further easing measures are expected. Read more

The authorities slightly eased financing restrictions for property developers and accelerated the issuance of mortgages for homebuyers.

Annual outstanding yuan loans are expected to rise 11.6 percent in January, similar to December, according to the survey. Broad M2 money supply growth in January was 9.2%, down from 9.0% in December.

China has also stepped up investment in infrastructure to cushion the economic downturn, funded by faster issuance of local government special bonds.

China has issued 1.46 trillion yuan under the 2022 advance quota for local government special bonds to boost investment and support the economy.

Any acceleration in government bond issuance could help boost total social finance (TSF), a large measure of credit and liquidity. TSF outstandings increased by 10.3% in December against 10.1% in November.

In January, the TSF is expected to hit 5.46 trillion yuan, up from 2.37 trillion yuan in December.

($1 = 6.3588 Chinese yuan renminbi)

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Reporting by Judy Hua and Kevin Yao; Editing by Shailesh Kuber

Our standards: The Thomson Reuters Trust Principles.

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