Bank lending beats expectations
Print Edition
CHINA has pumped money into the economy with banks extending more loans than expected, confirming stepped up efforts to re-energize growth and avert a sharper slowdown.
But analysts said more stimulus will be needed to ensure a sustained recovery.
Chinese banks provided a much stronger-than expected 1.08 trillion yuan (US$173.9 billion) in new yuan loans in June, the People’s Bank of China said yesterday.
That was nearly 20 percent more than market expectations, according to a Reuters poll.
Broad M2 money supply jumped 14.7 percent last month from a year earlier — the highest in 10 months.
Analysts attributed the strong growth of money supply partly to a low base in June 2013, but they hailed the “surprising pick-up” of bank lending as an indication of measures to support the economy.
“The increase in bank lending is positive and will help to offset the contraction in non-bank lending activities,” HSBC said in a report yesterday co-authored by economists Qu Hongbin and Julia Wang. “More lending, if sustained, will complement faster fiscal expenditure at the central as well as local level, and lend stronger support to the recovery.”
Official data released on Monday showed that fiscal spending has jumped around 25 percent year-on-year for two straight months after the Ministry of Finance urged local governments to spend more to stabilize the economy.
Fiscal expenditure in June surged 26.1 percent last month from a year earlier to 1.65 trillion yuan (US$267.7 billion), the Ministry of Finance said on Monday.
Economists said continuous bank lending growth is necessary to ensure the economy stays on track, while monetary and fiscal authorities may still adopt an accommodative stance.
Yang Chao, a researcher with Qilu Securities Co, said: “The central bank will carry on with structural relaxing measures to support economic recovery into the fourth quarter. Bank lending will be a major tool to drive growth.”
Total social financing, the broadest measure of credit supply, including loans, bank acceptance bills, corporate bonds and equity financing amounted to 1.97 trillion yuan in June, nearly a trillion yuan more than a year earlier, the central bank said yesterday.
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