Key facts
- China's new bank loans increased to 60 billion yuan ($8.95 billion) in August.
- This figure fell short of the 400 billion yuan analysts had forecast.
- August's lending marked a rebound from a 340 billion yuan contraction in July.
- Weak demand from household and corporate sectors continues to weigh on credit growth.
- Outstanding yuan loans grew 4.9% year-on-year in August, the slowest pace on record.
China's new bank loans increased to 60 billion yuan ($8.95 billion) in August, a rebound from the record contraction seen in July, but the figure fell significantly short of analysts' expectations. The weak credit growth reflects ongoing sluggish demand from both household and corporate sectors, according to Reuters calculations based on data from the People's Bank of China (PBOC).
Analysts polled by Reuters had forecast new yuan loans in August to rebound to 400 billion yuan, a figure still well below the 590 billion yuan recorded a year earlier. In July, new loans had contracted by 340 billion yuan. Outstanding yuan loans grew 4.9% year-on-year in August, slowing from 5.1% in July to the weakest pace on record. Broad M2 money supply expanded 7.5% year-on-year in August, a 17-month low.
Weak loan demand remains a persistent drag on the world's second-largest economy, even as Chinese authorities have sought to broaden financing channels beyond traditional bank lending, including through equity and bond markets. To bolster consumption and investment, Beijing recently expanded loan interest subsidies for small private firms and consumers and announced an injection of $54 billion into eight state-owned financial institutions to shore up their core capital and sustain lending. Policymakers also introduced new measures to stabilize China's property sector, though analysts remain cautious about the pace of a broader recovery in housing demand.