(Yicai Global) Feb. 13 -- China’s new yuan-denominated loans set a monthly record high in January, surpassing predictions and showing that the economy is recovering quickly, while the dip in newly added social financing was not as much as the market had expected.

China’s banks extended CNY4.9 trillion (USD720 billion) in new yuan loans last month, up CNY922.7 billion (USD135 billion) from a year earlier, according to data released by the People’s Bank of China on Feb. 10. Chief economists polled by Yicai Global had forecast an increase to CNY4.08 trillion.

Lending in yuan hit a monthly high, indicating the rapid restoration of China’s economic fundamentals and the acceleration of the recovery of market-oriented financing demand, said Wen Bin, chief economist at China Minsheng Bank.

Corporate borrowing soared to CNY4.68 trillion in Janaury, PBOC data showed. M2, a broad measure of money supply that covers cash in circulation and all deposits, jumped 12.6 percent to CNY273.81 trillion (USD40.2 trillion) at the end of last month from a year ago, the highest since April 2016, and more than the 11.7 percent the economists that had predicted.

Boosted by government policies, credit growth has been good since last April, Everbright Securities noted, adding that January’s data show that the trend consolidated last month.

Newly added social financing, a broad measure of credit liquidity in the world’s second-largest economy, was CNY5.98 trillion in January, a decline of CNY195.9 billion. But the figure beat expectations. The economists had predicted a drop to CNY5.58 trillion.

Because of rising interest rates on bonds, companies are less willing to issue notes, Wen noted, adding that that led to a year-on-year fall in net bond financing of CNY435.2 billion, which was the main drag on social financing.

Although social financing fell, it was actually strong considering the high base and impact of the Chinese New Year holiday last year, according to Soochow Securities. China needs to focus on restoring the demand for personal borrowing, with the expansion of consumption and stabilization of the real estate market key, it added, noting that policy support is still needed.

Resilient credit expansion along with upturns in real estate and consumption are still critical, Wen said. Policies are needed to continue to support and maintain a stable monetary environment, keeping economic growth on course at the start of the year, Wen pointed out.

Editor: Futura Costaglione