Home Business China’s Dec new yuan loans seen lower, but hitting record in 2022

China’s Dec new yuan loans seen lower, but hitting record in 2022

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BEIJING — New bank loans in China likely fell in December but lending for all of 2022 still set a record, a Reuters poll showed, as the central bank kept supporting the COVID-ravaged economy.

Chinese banks are estimated to have issued 1.10 trillion yuan ($162.3 billion) in net new yuan loans last month, down from 1.21 trillion yuan in November, according to the median estimate in the survey of 23 economists.

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If December data, due during the coming week, is in line with forecasts, total new lending in 2022 would hit 21 trillion yuan, up from the previous record of 19.95 trillion yuan in 2021.

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The central bank cut banks’ reserve requirement ratio by 25 basis points (bps) effective from Dec. 5, releasing about 500 billion yuan in long-term liquidity to prop up a faltering economy.

Chinese leaders have pledged to increase support for the world’s second-largest economy, which was hit hard by COVID-19 lockdowns last year as well as slowing global demand. After tough virus curbs were abruptly lifted in December, the country is now battling a surge of infections.

The central bank has promised to make its policy “precise and forceful” this year to support the economy, keeping liquidity reasonably ample and lowering funding costs for businesses.

Broad M2 money supply growth in December was seen at 12.2%, compared with 12.4% the previous month.

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Annual outstanding yuan loans were expected to grow by 11.0% for December, the same as for November.

Chinese policymakers have been doubling down on infrastructure spending, issuing more debt for funding big-ticket projects to shore up the economy.

Any acceleration in government bond issuance could help boost total social financing (TSF), a broad measure of credit and liquidity.

Local governments issued a net 4.03 trillion yuan in special bonds in January-November, the finance ministry data showed.

In December, TSF is expected to fall to 1.60 trillion yuan from 1.99 trillion yuan in November. ($1 = 6.7771 Chinese yuan renminbi) (Reporting by Judy Hua and Kevin Yao; Editing by Toby Chopra)

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