BEIJING (Reuters) – China’s new yuan lending is expected to jump in September after a surprising surge in August, a Reuters poll showed, as the central bank strives to boost the economy’s recovery amid tepid demand both at home and abroad.
Chinese banks are forecast to have extended 2.5 trillion yuan ($342.63 billion) in net new yuan loans last month, up 84% from August, when new loans nearly quadrupled to 1.36 trillion yuan, according to the median estimates of 23 economists. Net new yuan loans in September last year were 2.47 trillion yuan.
The central bank has vowed to implement policy in a “precise and forceful” manner to support the economy, which has showed some signs of steadying after a flurry of recent policy steps.
In September, the central bank cut the reserve requirement ratio – the amount of cash that banks must hold as reserves – for the second time this year to boost liquidity and aid growth.
“The key focus should be on whether credit demand picks up following recent policy measures,” analysts at Citi said in a note.
“For corporate, long-term loans should be a point to watch – with bottoming exports and profit improvement, the number should rise again. For households, early mortgage repayment should end with the long-waited mortgage repricing.”
China is expected to meet the annual growth target of slightly more than 5% this year, an adviser to the central bank said in September. Some analysts, however, thought the target could be missed amid woes over a prolonged property slump and weak consumer sentiment.
Outstanding yuan loans were estimated to grow by 11.1% in September from a year earlier, unchanged from August, the poll showed. Broad M2 money supply growth was seen rising 10.7% year-on-year, quickening slightly from the previous month’s 10.6%.
Any acceleration in government bond issuance could help boost total social financing (TSF), a broad measure of credit and liquidity. Annual growth of outstanding TSF quickened to 9.0% in August from 8.9% in July.
Local governments issued a net 600.7 billion yuan in special bonds in August, more than triple July’s 196.3 billion yuan, according to official data. China is aiming to complete issuance of the 2023 special local government bonds quota of 3.8 trillion yuan by end-September.
In September, TSF is forecast to rise to 3.8 trillion yuan from 3.12 trillion yuan in August.
($1 = 7.2966 Chinese yuan renminbi)
(Reporting by Qiaoyi Li and Kevin Yao; Editing by Simon Cameron-Moore)
