By Joe Cash
BEIJING (Reuters) – China’s new loans are expected to have jumped in November from the previous month and exceeded the year-earlier amount, a Reuters poll showed, as the central bank works to shore up confidence and demand across the world’s second-largest economy.
Chinese banks are estimated to have issued 1.3 trillion yuan($181.72 billion) in net new yuan loans last month, up sharply from 738.4 billion in October, according to the median estimates of 19 economists. Last November, 1.21 trillion yuan was issued in new loans.
Last week, central bank chief Pan Gongsheng pledged to keep monetary policy accommodative to support the post-pandemic recovery, but also urged structural reforms to reduce reliance on infrastructure and property for growth.
As part of support measures, the People’s Bank of China (PBOC) has cut interest rates on some loans and pumped out more cash in recent months, in contrast to other major economies who have tightened policy to tackle inflation.
In September, the PBOC cut banks’ reserve requirement ratio for the second time this year, and analysts expect another cut in the coming weeks.
“We believe that banks may bring forward some of their releases originally planned for early next year to this November,” analysts at CITIC Securities said in a note, after central bank officials met with financial regulators last month.
Moody’s on Tuesday slapped a downgrade warning on China’s credit rating, citing concerns over the cost of bailing out over-indebted local governments and state firms and controlling the property crisis.
Outstanding yuan loans in November were estimated to have grown by 11.0% from a year earlier, the poll showed, up slightly on the 10.9% growth seen in October. Broad M2 money supply growth was seen rising 10.1% year-on-year, slowing slightly from the previous month’s 10.3%.
Household loans, including mortgages, will be closely watched for any signs of a pick-up in the property market. They contracted in October.
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 9.3% in October from 9.0% in September, as local governments rushed to issue refinancing bonds to pay their existing debt.
TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.
In November, TSF is forecast to rise to 2.6 trillion yuan from 1.85 trillion yuan in October.
($1 = 7.1539 Chinese yuan)
(Reporting by Joe Cash; Polling by Milounee Purohit and Anant Chandak in Bangalore; Editing by Jacqueline Wong)
