China’s new bank loans hit record high in January

February 14, 2025 (MLN):  New bank loans in China surged more than expected to an all-time high in January as the central bank moved to shore up a patchy economic recovery, reinforcing expectations for more stimulus in the coming months.

Chinese banks extended 5.13 trillion yuan ($706.40 billion) in new yuan loans in January, more than quadrupling the December figure, data from the People's Bank of China showed on Friday, beating analysts' forecasts.

Analysts polled by Reuters had predicted new yuan loans would rise to 4.5tr yuan last month, up sharply from 990bn yuan in December and compared with 4.92 trillion yuan a year earlier the previous record.

Chinese banks usually rush to lend at the beginning of the year as they compete for higher-quality customers and win market share, but lingering economic uncertainty continues to weigh on credit demand.

New bank lending totaled 18.09tr yuan last year, down from a record 22.75tr yuan in 2023 and hitting the lowest level since 2019, as businesses and consumers remained cautious about taking on more debt amid an uncertain economic outlook.

The economy grew 5% in 2024, meeting the government's official target, but the post-pandemic recovery has been patchy, with exports and manufacturing making up for weak domestic consumption.

Beijing is expected to maintain a growth target of around 5% this year, as Reuters reported.

However, analysts are uncertain about how quickly policymakers can revive sluggish domestic demand, especially as U.S. President Donald Trump's aggressive trade measures add more uncertainty for Chinese exporters.

To sustain growth and counter rising external pressures, Beijing has pledged higher fiscal spending, increased debt issuance, and further monetary easing.

The central bank said on Thursday it would adjust its monetary policy at the appropriate time and use policy tools such as interest rates and bank reserve requirement ratio to support the economy, amid rising external headwinds.

China is now facing a renewed trade war with the United States after President Donald Trump slapped sweeping 10% tariffs on all Chinese imports.

In response, Beijing announced tariffs of up to 15% on some U.S. imports starting February 10.

Still, the measures were more modest than markets had feared, raising hopes there was room for negotiating.

Since September, Beijing has stepped up efforts to get the economy back on track, including interest rate cuts, a 10tr yuan debt relief package for local government, and tax incentives to spur demand in the crisis-hit property market.

Broad M2 money supply grew 7.0% from a year earlier, the central bank data showed, below analysts' 7.2% forecast in a Reuters poll.

In December, M2 expanded 7.3%.

Outstanding yuan loans rose 7.5% in January from a year earlier, down from the 7.6% pace in December.

Analysts had expected 7.3% growth.

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