China's Fresh Bank Loans Reached A Record High In January

Beijing, Feb. 9 (Reuters): New bank loans in China jumped by more than expected to an all-time high in January as the central bank moved to shore up the sputtering economy, reinforcing expectations for more stimulus in the coming months.

In the midst of a severe real estate crisis and an extended stock market selloff, policymakers have promised to use further steps to assist the second-largest economy in the world’s weaker-than-expected post-COVID recovery.
In an effort to attract better-quality clients and increase their market share, Chinese lenders frequently front-load loans at the start of the year.

According to figures released on Friday by the People’s Bank of China (PBOC), banks extended 4.92 trillion yuan ($683.7 billion) in new yuan loans in January, setting a record, rising significantly from December, and exceeding analysts’ predictions.
Lending in January hit a record of 4.9 trillion yuan in the same month last year, more than quadrupling from December’s 1.17 trillion.

New yuan loans were expected to reach 4.50 trillion yuan in January, according to analysts surveyed by Reuters.
“January bank lending is stronger than expected, which will support the real economy,” Huajin Securities economist Luo Yunfeng stated.
“Going forward, monetary policy is likely to be loosened marginally,” Luo stated.

Last year, Chinese banks extended new loans totaling a record 22.75 trillion yuan, an increase of 6.8% over 2022. However, due to the unfavorable economic outlook, consumers and businesses were in no mood to take on more debt in December, as loan growth year over year dropped to its lowest level in more than 20 years.

China’s economy expanded 5.2% in 2023, fulfilling the official target. However, the rebound was much more fragile than many analysts and investors had anticipated, with a worsening real estate crisis, growing deflationary threats, and weak demand threatening the country’s prospects for this year.
In the face of ongoing deflationary threats and indications of a patchy economic recovery, the central bank announced on Thursday that it will continue to maintain price stability while keeping policy flexible and precise to boost domestic demand.