China: banks grant fewer loans, despite push from the Chinese Central Bank
The Chinese government's incentives do not yet seem to be sufficient to relaunch the economy decisively, and this can be seen from the trend in bank loans.
Chinese banks extended CNY1.45 trillion in new yuan loans in February 2024, down from a record CNY4.92 trillion in January and missing market forecasts of CNY1.50 trillion, despite the central bank's efforts to support the recovery of the economy and combat deflationary pressures. THE
Last month, the PBOC announced its largest-ever reduction in the mortgage benchmark rate. Furthermore, Governor Pan Gongsheng recently stated in a press conference that there is still room to cut banks' RRR, following the 50 basis point cut in January. Total social financing, which is a broad measure of credit and liquidity, fell to CNY1.56 trillion, also down from a record CNY6.5 trillion and well below forecasts by CNY 2.22 trillion.
The M2 money supply increased 8.7% from a year earlier, the slowest pace since November 2021 and missing forecasts by 8.8%. Yuan loans rose 10.1%, down from 10.4% in January and below market expectations of 10.2%.
Here is the graph with loans on an annual horizon:
Here's everything over a five-year horizon:
So despite the increase in the money supply and the lowering of rates, there is not a very sustained flow of loan applications. Things are going well, but not very well and the uncertainties linked to the real estate sector are probably weighing heavily, with Country Garden also defaulting on its debt in China, coming even closer to forced liquidation .
Beijing must solve the problems of the real estate and financial sectors if it wants a genuine revival of the economy.
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The article China: banks grant fewer loans, despite the push from the Chinese Central Bank comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cina-le-banche-concedono-meno-prestiti-nonostante-la-spinta-della-banca-centrale-cinese/ on Fri, 15 Mar 2024 20:00:47 +0000.