China Jan new loans surge to record 2.9 trillion yuan

Rise was much stronger than usual for the start of the year

BEIJING, Feb 12, (RTRS): China’s banks extended a record 2.9 trillion yuan ($458.3 billion) in new yuan loans in January, blowing past expectations and nearly five times the previous month as policymakers aim to sustain solid economic growth while reining in debt risks.

While Chinese banks tend to front-load loans early in the year to get higher-quality customers and win market share, the lofty figure was even higher than the most bullish forecast by economists in a Reuters poll.

Net new loans surpassed the previous record of 2.51 trillion yuan in January 2016, which is likely to support growth not only in China but may underpin liquidity globally as major Western central banks begin to withdraw stimulus.

Analysts polled by Reuters had predicted new yuan loans of 2 trillion yuan, up sharply from December’s 584.4 billion yuan. A more detailed breakdown of the loan data on Monday showed sharp pickups in demand for credit from both households and companies, auguring well for consumption and investment.

“Banks hope to lend early to get early returns ... private investment and manufacturing investment are picking up due to firmer global demand (and) household loans could be boosted by property demand,” said Nie Wen, economist at Hwabao Trust in Shanghai. “This indicates the economy may slow in the first half but any slowdown won’t be sharp ...”

Corporate loans surged to 1.78 trillion yuan from 243.2 billion yuan in December, while household loans rose to 901.6 billion yuan in January from 329.4 billion yuan in December, according to Reuters calculations based on the central bank data.

Beijing is in the second year of a regulatory push to clamp down on riskier financial activity that has been fueled by a rapid build-up in debt.

But authorities are proceeding cautiously and keeping liquidity broadly supportive to avoid any sharp drag on the world’s second-largest economy or excessive financial market volatility.