China's PBOC warns against 'one-sided' credit policy
New bank lending in China rose less than expected in March from the previous month
China's central bank yesterday cautioned against a "one-sided" pursuit of credit expansion after data showed a slowdown in bank lending, vowing to prioritise the quality of credit over size and move to revitalise existing loans.
New bank lending in China rose less than expected in March from the previous month, while broad credit growth hit a record low, boosting the case for the central bank to roll out more stimulus steps to help achieve an ambitious growth target.
The central bank will channel more funds into technology innovation, green manufacturing and small firms, the Communist party committee of the People's Bank of China (PBOC) said in an article in the official People's Daily.
"With the transition of the economy from high-speed growth to high-quality development, ... it is even more necessary to change the traditional mindset of one-sided pursuit of scale and establish the concept of prioritising quality and efficiency," the PBOC said.
"Credit allocation should ultimately be in line with the needs of high-quality development of the real economy. The key is to grasp the level well, rather than the more, the better."
The central bank will guide financial institutions to maintain balanced credit allocation and boost stability and sustainability of loan growth, it said.
The world's second-biggest economy grew faster than expected in the first quarter, but several March indicators, such as property investment, retail sales and industrial output showed that domestic demand remains frail, weighing down momentum.
The central bank said 2024 growth of money supply and total social financing – a broad measure of credit and liquidity in the economy – would match expected goals for economic growth and inflation.
"Revitalising existing credit is of great significance in improving the quality and efficiency of financial services to the real economy," it added.
The central bank will take steps to free up financial resources inefficiently taken up by some firms and sectors, it said, adding that China's outstanding yuan loans approach 250 trillion yuan (US$34.55 trillion).