NEW bank lending in China tumbled more than expected to a three-month low in October, as a ramp-up of policy stimulus to buttress a wavering economy failed to boost credit demand.
Chinese Banks Extend Less Loans than Expected
Chinese banks extended 500 billion yuan (S$92.5 billion) in new yuan loans in October, down sharply from September and falling short of analysts’ expectations, according to data released by the People’s Bank of China (PBOC).
Economists polled by Reuters had predicted a fall in new yuan loans to 700 billion yuan last month from 1.59 trillion yuan the previous month and against 738.4 billion yuan a year earlier.
Corporate Financing Demand Remains Weak
“Corporate financing demand remains weak due to poor profitability,” said Luo Yunfeng, an economist at Huaxin Securities. “Credit demand may not pick up soon despite recent central bank policy measures.”
PBOC Unveils 10 Trillion Yuan Debt Package
China unveiled a 10 trillion yuan debt package on Friday to ease local government financing strains and stabilise flagging economic growth, as it faces fresh pressure from the re-election of Donald Trump as US president.
More Steps on the Cards
New measures planned will include sovereign bonds issuance to replenish the coffers of big state banks, and policies to support purchase of idle land and unsold flats from developers, Finance Minister Lan Foan said.
Conclusion
Despite the central bank’s efforts to boost the economy, new bank lending in China fell short of expectations, indicating a continued slowdown in credit demand. The PBOC’s 10 trillion yuan debt package is expected to ease local government financing strains, but its impact on the overall economy remains uncertain.
FAQs
Q: Why did new bank lending in China fall short of expectations?
A: New bank lending in China fell short of expectations due to weak corporate financing demand and poor profitability.
Q: What is the PBOC’s 10 trillion yuan debt package?
A: The PBOC’s 10 trillion yuan debt package is aimed at easing local government financing strains and stabilising flagging economic growth.
Q: How will the debt package impact the overall economy?
A: The impact of the debt package on the overall economy is uncertain, but it is expected to ease local government financing strains and support economic growth.
