Loan growth in China rebounded in May after the PBoC prods Banks


By Geoffrey Smith — China’s credit growth accelerated in May after the central bank relied on the country’s commercial banks to do more to support an economy suffering from COVID-related lockdowns -19 and a serious real estate crisis.

The People’s Bank of China said total social finance, the broadest measure of lending in the economy, rose 2.79 trillion yuan ($417 billion) after falling to just 910 billion yuan a year earlier. months earlier, when the major financial hub of Shanghai joined the list of regions and cities under COVID-19 lockdown measures.

New loans issued rebounded to 1.89 trillion yuan from just 645 billion a month earlier, the lowest total in more than four years. M2 money supply growth also accelerated to 11.1% over the year from 10.5%, defying expectations of a slowdown to 10.4%.

The PBoC had urged banks in May to lend more to small and medium-sized businesses, many of which operate in a services sector particularly hard hit by the shutdowns. It had followed this by cutting its benchmark rate for five-year mortgages, although the direct economic impact of this was seen by analysts as limited. The PBoC measures were part of a broader and coordinated fiscal and monetary support package, in which fiscal measures were more important to support demand.

Hopes of broader central bank support in the form of interest rate cuts rose on Friday after Beijing said consumer inflation remained at 2.1% in May, against aware of the global upward price trend. Producer price inflation also declined to a 13-month low of 6.4%.

Analysts have had to cut their growth forecasts for China this year as lockdown measures have kept nearly 500 million people away from shops, restaurants, trains and, in many cases, workplaces over the past few years. last two months. The Organization for Economic Co-operation and Development lowered its forecast to 4.4% on Thursday from an earlier estimate of 5.1%. The government forecast is still 5.5%.

Hopes for a sustained recovery in economic activity had risen after Shanghai and then Beijing eased mobility restrictions over the past two weeks. However, authorities in Shanghai on Friday imposed new restrictions on more than half of the city’s 25 million people after detecting 11 cases of COVID-19 in what appears to be a new outbreak.

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