China’s credit jumped in September as local governments rushed to sell infrastructure bonds and authorities eased mortgage restrictions in a bid to boost demand for real estate.
(Bloomberg) — China’s credit jumped in September as local governments rushed to sell infrastructure bonds and authorities eased mortgage restrictions in a bid to boost demand for real estate.
- Aggregate financing, a broad measure of credit, was 4.12 trillion yuan ($564 billion), the People’s Bank of China said Friday. That was well above the median estimate of 3.7 trillion yuan in a Bloomberg survey of economists.
- Financial institutions offered 2.31 trillion yuan worth of new loans in the month, lower than economists’ forecasts of 2.5 trillion yuan, and compared with 2.47 trillion yuan a year ago.
The boost can in part be explained by timing, as banks usually rush to extend loans at the end of each quarter to meet their lending targets and satisfy regulatory requirements. Last month’s data may also be bolstered by recent stimulus — including a move by the PBOC to release long-term liquidity into the financial system by cutting the reserve requirement ratio, encouraging banks to lend more.
Several measures to spur people to buy more homes — such as lowering downpayment requirements in cities — also essentially took effect from September. The additional support for the economy came as China’s post-pandemic recovery has lost steam, with the property crisis weighing on demand and sentiment. Exports have been falling and the job market has been gloomy, especially for recent graduates.
The impact from stronger policy support so far, however, has been limited. Some sectors are seeing a mild rebound, but home sales are still struggling and spending over the critical Golden Week holiday period was cooler than expected.
To ensure the economy meets Beijing’s 2023 growth target of around 5%, policymakers are considering raising this year’s budget deficit and issuing at least 1 trillion yuan of additional sovereign debt for spending on infrastructure such as water conservancy projects, Bloomberg News has reported. That may push up the extension of credit in the coming months.
–With assistance from James Mayger.
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