China’s new yuan-denominated lending is expected to shrink by almost half in July from June



* reuters: // realtime / verb = Open / url = cpurl: //apps.cp./Apps/econ-polls? RIC = CNMSM2% 3DECI Money Supply Survey Data

* reuters: // realtime / verb = Open / url = cpurl: //apps.cp./Apps/econ-polls? RIC = CNNYL% 3DECI New Loan Survey Data

* New loans totaled 1.20 trillion yuan in July, up from 2.12 trillion yuan in June.

* Money supply growth in July amounted to 8.7% y / y against 8.6% in June.

* TSF volume in July was 1.70 trillion yuan versus 3.67 trillion yuan in June.

* Data on loans and money supply should be submitted on August 10-15.

BEIJING, August 9. (Reuters) – New yuan-denominated loans to China are expected to contract in July after record lending in the first six months, a Reuters poll showed, but they are still likely to be higher than a year earlier, the central bank expects. to support the country’s economic recovery.

According to an average estimate of 29 economists, Chinese banks issued 1.20 trillion yuan ($ 185.29 billion) in new yuan-denominated loans last month, up from 2.12 trillion yuan in June.

This will be more than the 992.7 billion yuan issued in the same month a year earlier.

Chinese banks issued a record 12.76 trillion yuan in new loans in the first half of 2021, even as the People’s Bank of China (PBOC) sought to curb lending growth overall to curb debt risks.

China is poised to speed up spending on infrastructure projects, while the central bank supports modest mitigation steps as risks from Delta and flooding threaten to slow its recovery, insiders and analysts say.

Last month, at a meeting of the Politburo, the ruling Communist Party’s highest decision-making body, it was announced that it remains flexible in the face of uneven domestic recovery and global uncertainty.

Since July 15, the NBK has reduced the required reserve ratio (RRR) for banks, freeing up about 1 trillion yuan in long-term liquidity. Analysts expect another decline in RRR this year.

Annual yuan-denominated loan debt is expected to rise 12.3% in July, similar to June, the survey showed. The growth of broad money supply M2 in July amounted to 8.7% compared to 8.6% in the previous month.

According to the Ministry of Finance, the net issuance of local government special bonds in the first half of the year reached 1.01 trillion yuan, accounting for 28% of the annual quota.

Any acceleration in the issuance of government bonds can help increase Total Social Funding (TSF), a broad measure of credit and liquidity. TSF growth slowed to 11% in June from an almost three-year high of 13.7% in October 2020.

In July, the TSF is expected to fall to 1.70 trillion yuan from 3.67 trillion yuan in June. ($ 1 = RMB 6.4755) (Reporting by Judy Hua and Kevin Yao; editing by Jacqueline Wong)


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