China Issued USD238.3 Billion in New Bank Loans in September, More Than Expected
Du Chuan
DATE:  Oct 17 2019
/ SOURCE:  yicai
China Issued USD238.3 Billion in New Bank Loans in September, More Than Expected China Issued USD238.3 Billion in New Bank Loans in September, More Than Expected

(Yicai Global) Oct. 16 -- China's financial institutions injected a higher than expected amount of liquidity into the real economy in September as the country introduces a series of monetary easing policies to boost slowing growth.

Banks extended CNY1.69 trillion (USD238.3 billion) in new yuan loans last month, according to statistics released by the People's Bank of China yesterday. This was CNY480 billion (USD67.7 billion) more than in August and a rise of CNY310 billion from the same period last year.

The newly added credit and loans went beyond predictions made last month, said Wang Qing, chief macroeconomic analyst at Golden Credit Rating International. This is largely the result of a further cut made to banks' reserve requirement ratio in September resulting in an increase in loanable funds.

The fundamentals of the Chinese economy will sustain long-term growth and demand for financing in the real economy remains strong, Ruan Jianhong, head of the PBOC's Financial Survey and Statistics Department, told reporters yesterday.

Since the beginning of the year, the government has taken active measures to strengthen countercyclical regulation, dredge channels where the financial system's liquidity transfers to the real economy and increase the funds injected into the actual economy, she added.

There is no basis for sustained inflation and deflation, said Sun Guofeng, head of the PBOC's Monetary Policy Department. The central bank will continue to monitor relevant indicators and manage inflation expectations.

Gauge Alignment

The central bank should keep the growth rate of M2 broad money and aggregate financing to the real economy basically consistent with that of the nominal Gross Domestic Product through steady monetary policies, he added.

M2 broad money increased by 8.4 percent year on year in September, 0.2 percentage points higher than August and 0.1 percentage points higher than the same period last year, according to the data from the PBOC.

Increased social financing, or the newly added capital received by the real economy from the financial sector, came to CNY2.27 trillion (USD320.2 billion) last month, skyrocketing by about CNY250 billion from August and up by about CNY140 billion from a year earlier.

Outstanding social financing, a measure of all the capital received by the real economy from the financial sector, tallied CNY219 trillion last month, up 10.8 percent year on year and 0.1 percentage points higher than in August.

Credit support has also improved. Corporate mid-and long-term loans last month increased by CNY135.2 billion from August and CNY183.7 billion year on year.

In general, there is a surge in credit and loans at the end of each quarter, but last month showed a sharp rise in loans to non-financial companies, Golden Credit Rating's Wang added. This is also proof that the government's call in July for financial institutions to strengthen their support of the manufacturing sector is achieving results, he said.

The Consumer Price Index went rose 3 percent year on year last month, data released yesterday by the National Bureau of Statistics showed.

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Keywords:   China's Central Bank,Monetary Policy