China’s New Yuan Loans Expected to Surge in September for Economic Boost
China’s Economic Recovery Relies on Increased New Yuan Lending
China’s new yuan lending is set to experience a significant boost in September, following a surprising surge in August. The country’s central bank aims to support the economy’s recovery amid sluggish demand at home and abroad. Chinese banks are projected to have extended ¥2.5 trillion ($342.63 billion) in net new yuan loans last month, marking an 84% increase from August. In August, new loans nearly quadrupled to ¥1.36 trillion, compared to ¥2.47 trillion in September last year.
Central Bank Policies Aimed at Boosting Liquidity and Growth
The central bank of China has committed to implementing policies in a “precise and forceful” manner to bolster the economy. Recent policy measures have shown promising signs of stabilizing the economic situation. In September, the central bank reduced the reserve requirement ratio for the second time this year, increasing liquidity and providing support for growth.
Analyzing Credit Demand and Economic Indicators
Analysts are closely monitoring the impact of recent policy measures on credit demand. For corporations, the focus is on long-term loans, which are expected to rise due to improving exports and profitability. In the housing sector, early mortgage repayment is anticipated to conclude with long-awaited mortgage repricing. While China is expected to achieve its annual growth target of slightly above 5% this year, concerns remain over a prolonged property slump and weak consumer sentiment.
Steady Growth in Outstanding Yuan Loans and Money Supply
Outstanding yuan loans are estimated to grow by 11.1% in September compared to the previous year, remaining unchanged from August. Broad M2 money supply is predicted to rise by 10.7% year-on-year, slightly accelerating from the previous month’s rate of 10.6%. Government bond issuance could contribute to boosting total social financing (TSF), a comprehensive measure of credit and liquidity. In August, outstanding TSF grew by 9.0% year-on-year, and local governments issued a net ¥600.7 billion in special bonds, surpassing July’s figure of ¥196.3 billion.
Positive Outlook for September’s Total Social Financing
In September, TSF is forecasted to increase to ¥3.8 trillion from August’s ¥3.12 trillion, further supporting economic growth and liquidity. The ongoing efforts to balance credit demand and economic recovery aim to strengthen China’s position and contribute to the global economic landscape.
($1 = ¥7.2966 renminbi)
