New Chinese yuan loans for December fell to a record high in 2021

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Chinese 100 yuan bills are seen in a counting machine as an employee counts them at a branch of a commercial bank in Beijing, China on March 30, 2016. REUTERS / Kim Kyung-Hoon

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  • New loans in December at 1.25 trillion yuan compared to 1.27 trillion yuan in November
  • Growth of money supply in December at 8.7% year-on-year against 8.5% in November
  • Dec TSF seen at 2.45 trillion yuan from 2.61 trillion yuan in November
  • Loans, money supply data due January 10-15

BEIJING, Jan. 7 (Reuters) – New bank lending to China likely declined in December, although lending for the full year of 2021 set a record, Reuters poll shows, with central bank maintaining support politics to economics.

Chinese banks are estimated to have issued 1.25 trillion yuan ($ 196.06 billion) in net loans in yuan last month, up from 1.27 trillion yuan in November, according to the survey’s median estimate. conducted with 21 economists.

If the December data, expected in the coming week, is in line with forecasts, total new loans in 2021 would reach 20.07 trillion yuan, up 2.2% from the previous record of 19.630. billion yuan in 2020.

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China’s central bank cut banks’ reserve requirement ratio (RRR) on Dec. 15, its second such move in 2021, freeing up 1,200 billion yuan in long-term liquidity to support business activity. Read more

The central bank also lowered rates on its 25 basis points (bps) repayment facility to support the rural sector and small businesses. Read more

The economy faces multiple challenges by 2022 due to a real estate slowdown and strict COVID-19 restrictions that have affected consumption and put pressure on the central bank to ease policy.

China will continue to implement proactive fiscal policy and prudent monetary policy in 2022. It will keep economic operations within a reasonable range in 2022, said the Politburo, the country’s top decision-making body.

The growth of the broad money supply M2 in December stood at 8.7%, compared to 8.5% the previous month.

The outstanding amount of yuan loans is expected to increase by 11.7% in December compared to the previous year, as in November.

Beijing has mainly relied on fiscal stimulus to weather the slowdown, cutting taxes and issuing local government bonds to fund infrastructure projects.

Any acceleration in government bond issuance could boost total social finance (TSF), a broad measure of credit and liquidity.

China issued 1.46 trillion yuan ($ 229.30 billion) of the 2022 anticipated quota for special local government bonds to stimulate investment and support the economy. Read more

In December, TSF is expected to fall to 2.4 trillion yuan from 2.610 trillion yuan in November.

($ 1 = 6.3756 yuan Chinese renminbi)

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Reporting by Judy Hua and Kevin Yao; edited by Barbara Lewis

Our Standards: Thomson Reuters Trust Principles.

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