Talking Points
- Chinese bank lending increased markedly in January
- New loans hit 2.03 trilllion
- However total social financing hit a new monthly record
Chinese banks increased their lending in January, according to official data released late on Tuesday.
Financial institutions made new loans worth 2.03 trillion yuan ($294.96 billion), according to the People’s Bank of China. That was well above the additional 1.04 trillion yuan leant out in December and, indeed, marked the second-highest monthly total on record. However, it was less than analysts had expected, and a pattern of lending front-loaded in the early part of a calendar year is not new.
But total social financing came in at a new record, 3.74 trillion yuan, up from 1.63 trillion in December. This is a measure of credit in the overall economy which includes both bank and non-bank financing streams. It’s essentially the broadest measure of credit.
China’s broadest measure of money supply, known as M2, was up 11.3% on-year in January. That was the same pace as December, and slightly below reported market expectations.
The data are likely to be seen as a mixed blessing by China watchers. On the one hand appetite to borrow indicates a degree of faith in the economic future. On the other, China’s already high debt levels, and reliance on credit have already got plenty of forecasters worried.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
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