Due to strong corporate and household demand, new bank loans in China have risen when compared to last month. This is because the central bank walks a tightrope between supporting the rapidly recovering economy and containing debt risks.
In March, Chinese banks extended 2.73 trillion Yuan ($416.62 billion) in new Yuan loans, up from 1.36 trillion Yuan in February. This is according to data released by the People’s Bank of China (PBOC). According to Reuters’ calculations based on central bank data, bank lending in the first quarter to a record high of 7.67 trillion Yuan. The previous peak of 7.1 trillion Yuan in the first quarter of 2020 has been beaten now.
Many authorities have been worrying due to the surge in loans. This is because the financial regulators telling banks to trim their loan books. Growth in outstanding Yuan loans eased to 12.6% from a year earlier compared with 12.9% in February, despite the March surge. Hao Zhou, senior economist at Commerzbank said that personally they believe in social financing. It is more important gauge. Its growth rate is at a relatively low level. If it continues to slide, the contraction in credit looks pretty evident.
TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales. Investors who are increasingly worried about policy tightening as Beijing looks to exit from emergency measures are closing watching the China’s credit trends. The world’s second-largest economy is quickly regaining momentum.
The central bank has pledged to stabilise the country’s overall debt level. Policymakers are especially concerned about financial risks involving the country’s overheated property market. There’s typically around a six-month lag before shifts in credit growth show up in the wider economy. The credit slowdown will be a growing drag in the second half of the year.