By Kevin Yao and Liz Lee
BEIJING- New bank lending in China tumbled more than expected in February from a record high the previous month, even as policymakers seek to shield the economy from an escalating trade war with the United States by boosting consumption.
Chinese banks extended 1.01 trillion yuan ($139.62 billion)in new yuan loans in February – the lowest February reading since 2020, according to Reuters calculations based on data released by the People’s Bank of China (PBOC) on Friday.
Analysts polled by Reuters had expected new yuan loans would fall to 1.275 trillion yuan from a record 5.13 trillion yuan in January.
A pull-back in February from January was widely expected, because Chinese banks tend to front-load loans at the beginning of the year to get high-quality customers and win market share.
But Washington and Beijing have exchanged tit-for-tat tariffs in recent weeks, heightening uncertainty, with markets bracing for even more US measures.
“While bank loan growth continued to slow to record lows in February, that was more than offset by stronger growth in non-bank credit,” Capital Economics said in a note.
“Strong government bond issuance should continue to provide a prop to non-bank credit growth over the coming months, but subdued private demand will keep bank lending weak.”
Household loans, including mortgages, contracted 389.1 billion yuan, compared with a rise of 443.8 billion yuan in January, while corporate loans fell to 1.04 trillion yuan from 4.78 trillion yuan, according to Reuters calculations based on central bank data.
Combined January and February new loans totaled 6.14 trillion yuan, down from at 6.37 trillion yuan a year earlier.
Sluggish domestic demand, persistent deflationary pressures and a protracted property slump paint an uncertain economic outlook, while the heightening Sino-US tariff battle is threatening to curb exports, one of the few bright spots for the Chinese economy last year.
At the annual parliament session last week, China’s Premier Li Qiang unveiled fresh fiscal stimulus steps and pledged increased efforts to spur consumption, to help achieve an economic growth target of around 5 percent this year, which analysts have described as ambitious.
Central bank Governor Pan Gongsheng also reaffirmed a pledge to cut interest rates and inject liquidity into the financial system by cutting the amount of funds that banks are required to hold as reserves “at an appropriate time.”
