China Bank Lending Remains Weak
2024-08-09
2551
(fxcue news) - China's bank lending remained weak in July amid high interest rates, official data revealed on Tuesday.
Aggregate financing totalled CNY 18.87 trillion in the January to July period, which was down by CNY 3.22 trillion, the People's Bank of China said.
Within this total, yuan-denominated loans to the real economy increased by CNY 12.38 trillion in the first seven months of the year.
In July, banks lent only CNY 260 billion in local currency loans in July, well below economists' forecast of CNY 450 billion.
M2 money supply posted an annual growth of 6.3 percent, slower than the 6.2 percent rise in June.
Capital Economics' economist Leah Fahy said as the government has pledged to speed up the issuance and use of special bonds, it would boost broad credit growth and support the economy more broadly.
"But persistent weakness in private credit demand means the PBOC's incremental easing won't do much to boost bank loan growth," the economist added.
ING economist Lynn Song forecasts at least one more rate cut in 2024, with potentially more if global central bank start cutting rates more aggressively than expected.
China is set to ease policy at a slower rate than most global central banks, which should still provide a relatively favourable backdrop for the RMB in the medium-term, said Song.
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