BEIJING--Chinese banks sharply ramped up their lending in January amid strong demand for credit, a sign that Chinese businesses are gearing up for expansion.
Chinese banks gave out 2.03 trillion yuan (about $294.98 billion) in new loans last month, the People's Bank of China said Tuesday, with analysts saying bankers were rushing to lend out money under their 2017 lending allotments.
That is nearly double the CNY1.04 trillion loaned in December, the bank said, but below the record CNY2.5 trillion for the same month last year. It also fell short of the median forecast of CNY2.48 trillion by 11 economists polled by The Wall Street Journal.
Company-to-company loans, trust company loans and other alternative methods of financing also surged last month as property developers looked beyond banks to get capital amid the government's campaign against real estate speculation.
"Credit growth is strong, exports are improving and prices are rising. They all point to domestic economic recovery," said Yang Weixiao, an economist at Founder Securities Co. Ltd.
Medium- and long-term loans to nonfinancial corporations, a gauge of corporate-sector demand, amounted to 1.52 trillion yuan, higher than December's CNY695.4 billion. Medium- and long-term household loans, predominantly mortgage loans, came to 629.3 billion, compared with CNY421.7 billion in December.
The portions of nonfinancial corporations loans in total new bank lending continued to increase last month, while the share of mortgage loans dropped.
Total social financing, a measure of credit in the economy that includes both bank and nonbank financing, reached a record high of CNY3.74 trillion in January,up from CNY1.63 trillion in December.
Corporate bond issuance remained sluggish, Citi Group economists said in a note Tuesday. Rising bond yields and continued central bank scrutiny may have slowed corporate bond issuance, they said.
As the central bank adopted a tightening stance this year, China's strong credit growth is expected to cool down in the coming months, economists said.
The People's Bank of China raised key interest rates in the money market in recent weeks, reinforcing a shift toward tighter monetary policy aimed at deflating asset bubbles and reducing long-term financial risk.
"Given top leaders have set the tone for monetary policy as 'neutral,' regulators have to rein in credit growth in the months ahead," economists at Macquarie Capital Ltd. said.
China's broadest measure of money supply, M2, was up 11.3% at the end of January from a year earlier, the same as December's pace, and slightly undershot the economists' forecast of 11.4%.
Another measure, M1, which covers liquid assets such as cash and demand deposits, ended January up 14.5% from a year earlier, slower than December's 21.4% pace.
(END) Dow Jones Newswires
February 14, 2017 09:07 ET (14:07 GMT)
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