BEIJING- China’s new bank loans likely rose in September but other key gauges of credit growth remained lacklustre, a Reuters poll showed, reinforcing expectations Beijing needs to deliver more support to stabilize the economy as trade pressures build.
Chinese regulators have been trying to boost bank lending and lower corporate financing costs for over a year, but the pick-up in loan growth has been modest compared to previous rounds of stimulus, and economic activity has continued to slow.
Analysts say the problem is not a lack of credit, but weakening business and consumer confidence as the US-China trade war drags on, weighing on activity from manufacturing and investment to retail sales.
Chinese banks are expected to have issued 1.4 trillion yuan ($196.02 billion) in net new yuan loans last month, up 16 percent from 1.21 trillion yuan in August but largely in line with the tally in September last year, according to a median estimate in a Reuters survey of 30 economists.
Broad M2 supply was seen unchanged from 8.2 percent growth in August.
But growth of outstanding loans was expected to decelerate for a sixth straight month.
Annual growth of outstanding loans in September was seen edging down to 12.3 percent in September, the lowest since July 2002, from August’s 12.4 percent.
Some analysts say the annual comparison is a better way to assess trends in China’s credit growth, rather than more volatile monthly readings.
In a bid to boost bank lending, the central bank has pumped out trillions of yuan in liquidity by repeatedly cutting banks’ reserve requirement ratios (RRR) since early 2018.
But despite repeated calls by regulators to help struggling smaller, private firms, banks have been reluctant to lend as such firms are considered bigger credit risks. Some factory managers have told Reuters they have lost financing or had their credit lines sharply cut back.
More recently, Chinese regulators have stepped up efforts to rein in mortgage lending amid concerns about property prices and rising household debt.
Offsetting the modest pick-up in yuan loans, Reuters survey respondents expect total social financing (TSF), a broad measure of credit and liquidity in the economy, to drop to 1.8 trillion yuan in September from 1.98 trillion in August.
The expected decline is likely due to lower issuance of both corporate and local government special bonds.
Net issuance of local government bonds are estimated to fall notably as the provincial authorities are already close to exhausting their annual bond quotas. – Reuters