A Reuters poll showed that new bank loans in China likely fell in December, although lending for the whole of 2021 hit a record, as the central bank maintained policy support for the economy.
It was estimated that Chinese banks issued 1.25 trillion yuan ($196.06 billion) in net yuan loans last month, down from 1.27 trillion yuan in November, the median estimate found in a survey of 21 economists.
If the December data, due within the next week, is in line with expectations, total new lending in 2021 will reach 20.07 trillion yuan, 2.2 percent more than the previous record of 19.63 trillion yuan in 2020.
China’s central bank lowered the reserve requirement ratio (RRR) for banks on December 15, the second such step in 2021, as it released 1.2 trillion yuan of long-term liquidity to boost business activity.
The Central Bank also cut interest rates on the approved facility by 25 basis points to support the rural sector and small businesses.
The economy faces multiple challenges as 2022 approaches due to the real estate downturn and severe restrictions related to the emerging Corona virus, which affected consumption and pressured the Central Bank to ease policy.
The Politburo, the country’s top decision-making body, said that China will continue to implement a proactive fiscal policy and prudent monetary policy in 2022. It will keep economic operations within a reasonable range in 2022.
The growth of the broad M2 money supply in December saw 8.7 percent, compared to 8.5 percent in the previous month.
Outstanding yuan loans are expected to grow 11.7 percent in December from a year earlier, the same growth in November.
Beijing has mostly relied on fiscal stimulus to counteract deflation, cut taxes and issue local government bonds to fund infrastructure projects.
Any acceleration of government bond issuance could boost aggregate social finance (TSF), a broad measure of credit and liquidity.
China issued 1.46 trillion yuan (US$229.30 billion) in the 2022 pre-quote of special local government bonds to help stimulate investment and support the economy.
In December, TSF is expected to fall to 2.45 trillion yuan from 2.61 trillion yuan in November.
Source: Reuters (Reporting by Judy Hua and Kevin Yao, Editing by Barbara Lewis)