CHINA’S BANK lending rose strongly in August to a new record level for the month, a clear sign the government is trying to reverse an economic slowdown that threatens to cost jobs and undermine support for the Communist Party.
New local currency lending was 703.9 billion yuan (€87 billion) last month, the People’s Bank of China said in Beijing. That was more than the 600 billion yuan (€73.8 billion) analysts had expected, and outstripped July’s 540 billion yuan (€66.4 billion) lent in July. Bank lending is an important indicator in China because the government decides lending and it gives information about policy aims and how demand for credit is going.
Chinese data for August has been largely disappointing. Trade data on Monday was weak, while data on Sunday showed industrial output growth hit its weakest annual pace in August in more than three years as companies wrestled with falling orders.
There is speculation the central bank might ease monetary policy further, in the wake of speedier approval of infrastructure investment projects in recent weeks by the National Development and Reform Commission.
The pick-up in lending follows rate cuts in June and July, and a warning from the labour ministry that the slowdown is starting to hit the job market.
Capital Economics analysts Mark Williams and Qinwei Wang said the lending figures were a rare piece of optimism.
“But any optimism should be tempered by the fact that borrowing by firms, as opposed to households, remains weak,” they said in a research note.
“The further we dig into today’s data, the more sceptical we become that they are particularly encouraging. It is hard to see how the economy can be turned around unless firms decide to invest. There is not yet much sign of that happening on a large scale,” they said.
August’s data has prompted fears that China is on track for its seventh successive quarter of slowing growth, and it is looking increasingly unlikely to meet its official 7.5 per cent growth target for the year.
