China’s new yuan loans in April set to decline amid continued policy normalization: Reuters poll

BEIJING: New bank lending to China is expected to have fallen in April after rebounding in March, Reuters poll showed, as central bank continues to normalize policy as economy recovers rapidly, while maintaining support small businesses.

It is estimated that Chinese banks issued 1.6 trillion yuan ($ 247.37 billion) in net new yuan loans last month, up from 2.73 trillion yuan in March, according to the median estimate of the survey of 19 economists.

This would be slightly lower than the 1.7 trillion yuan issued in the same month a year earlier.

Annual yuan loans are expected to increase 12.5 percent in April, down from 12.6 percent in March, according to the survey. The broad money supply of M2 is expected to increase by 9.3% in April compared to the previous year, or less than 9.4% year-on-year the previous month.

Credit growth in China is being watched closely by investors who are increasingly worried about tightening policies as Beijing seeks to exit emergency measures now that the economy is quickly recovering from the shadows.

The surge in lending earlier this year prompted regulators to ask banks to reduce their credit books to guard against the risks of bubbles in domestic financial markets, Reuters reported in March.

Last week, key leaders reiterated their pledge not to abruptly change macroeconomic policies and make the economic recovery more balanced.

“We continue to expect a gradual exit from the policy of the previous monetary and fiscal stimulus,” UBS analysts said. “In particular, we expect (broad) credit growth to slow to 11% by the end of 2021 from 12.3% year-on-year in March, mainly due to tighter macroprudential rules and a supply of credit. less liquidity. “

In April, TSF is expected to dip to 2.25 trillion yuan from 3.34 trillion yuan in March.

“We have already seen a more substantial decline in other forms of borrowing,” analysts at Capital Economics said in a note. “Shadow credit has resumed its contraction in recent quarters. And there has been a sharp drop in government bond issuance, due to lower quotas for 2021, and corporate bond issuance, due to concerns about default risks in a context of downturn. reduction in state support.

“It will blow the wind off China’s economic rebound.”

The data is expected to be released May 10-15.

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