BEIJING (Reuters) – China’s new bank loans are expected to surge to a record high in January on a seasonal boost, a Reuters poll showed, while credit growth may be constrained by some marginal tightening of monetary policy as the central bank focuses on preventing risks.
Chinese banks tend to front-load loans at the beginning of the year to get higher-quality customers and win market share.
Chinese banks are estimated to have issued 3.5 trillion yuan ($542.06 billion) in net new yuan loans last month, up from 1.26 trillion yuan in December, according to the median estimate in a Reuters survey of 27 economists.
The lending tally would be highest based on Reuters records, topping the 3.34 trillion yuan seen in January 2020.
The People’s Bank of China (PBOC) has rolled out a raft of measures since early-2020 to support the virus-hit economy. But it has shifted to a steadier stance in recent months and kept its benchmark lending rate, the loan prime rate, unchanged since May.
Market rates started rising recently as the PBOC refrained from making its usual liquidity injections to meet high demand for cash ahead of the Lunar New Year holidays, leading to increasing concerns about liquidity tightening sooner than expected.
Monetary policy will continue to prop up the economy, but at the same time the central bank will watch for risks, PBOC governor Yi Gang said last month.
January also saw many commercial banks in bigger cities sharply slow the issuance of property loans and mortgages amid tight credit quotas, following stringent loan caps instituted by central bank to contain the flows of fund into the real estate sector.
Broad M2 money supply growth in January was seen at 10%, compared with 10.1% the previous month.
Annual outstanding yuan loans were expected to grow by 12.7% for January, one notch below December’s 12.8%.
Total social financing (TSF), a broad measure of credit and liquidity, is expected to jump to 4.45 trillion yuan from 1.72 trillion yuan in December.
“Looking ahead, given the pandemic related uncertainties and strong seasonal liquidity demand, we expect the PBOC to offer sufficient liquidity ahead of Chinese New Year through various liquidity facilities,” economists at UBS said.
They also forecast policy normalisation to resume after March as China’s COVID-19 cases will likely be contained, the country’s growth gains further traction and the global pandemic situation becomes more visible.
($1 = 6.4569 Chinese yuan renminbi)
Reporting by Lusha Zhang and Ryan Woo; Editing by Lincoln Feast.
