(Yicai) July 14 -- China issued CNY12.92 trillion (USD1.8 trillion) of new yuan-denominated loans during the first half of the year, underscoring strong lending to the real economy, the central bank said.

The bulk of the new loans went to key sectors such as manufacturing and infrastructure, Yan Xiandong, head of the statistics department at the People’s Bank of China, said at a press conference today.

Loans to businesses and public institutions rose by CNY11.57 trillion, with short-term lending climbing by CNY4.3 trillion (USD600 billion) and medium- to long-term lending increasing by CNY7.17 trillion, Yan said. 

Loans to households rose by CNY1.17 trillion, with short-term lending falling by CNY300 million (USD41.85 million) and medium- to long-term lending growing by CNY1.17 trillion. 

Against the backdrop of a 90-day trade truce with the United States, China has introduced a raft of economic stimulus measures since May, including cuts in interest rates and the share of cash banks must hold in reserve.

The comprehensive package of 10 monetary policy measures announced on May 7 was fully carried out within a month, boosting market confidence and steadying expectations, according to PBOC Deputy Governor Zou Lan.

Zou pointed out that in recent years there have been multiple cuts to banks’ reserve requirement ratio, showing that monetary policy has remained supportive, and the effects of these policies are continually building. 

Since 2020, the PBOC has cut the RRR 12 times and lowered policy rates nine times, resulting in a 115 basis points decline in the one-year loan prime rate and a 130 basis points drop in the five-year LPR.

The PBOC will continue to implement a moderately accommodative monetary policy, Zou said, ensuring the effective use of various tools that have been introduced, and enhance the quality and efficiency of financial services for the real economy.

M2, a broad measure of money supply that covers cash in circulation and all deposits stood at CNY330.29 trillion (USD46 trillion) at the end of last month, an increase of 8.3 percent from a year earlier, per the PBOC’s data.

M1, a narrow gauge of money supply that covers circulating cash and non-bank and non-government deposits climbed 4.6 percent to CNY113.95 trillion in the period, while M0, currency in circulation, jumped 12 percent to CNY13.18 trillion.

The total social financing, the amount of financing provided by the financial system to the real economy, was CNY430.22 trillion at June-end, up 8.9 percent. In the first half, the cumulative increase in social financing amounted to CNY22.83 trillion, or CNY4.74 trillion more than in the same period of last year, the data showed.

Editor: Tom Litting