Chinese banks doled out a record 4.92 trillion yuan (US$684 billion) in new loans in January, marking the highest monthly figure ever and signaling Beijing’s intent to bolster the slowing economy. This figure surpasses the previous January record of 4.9 trillion yuan and December’s much lower 1.17 trillion yuan, exceeding even analyst expectations of 4.67 trillion yuan.
However, the People’s Bank of China (PBOC) cautioned against interpreting this surge as a sign of aggressive monetary loosening. In its fourth-quarter monetary policy report, the central bank downplayed the significance of high-frequency data like monthly credit, citing seasonal factors and government initiatives that boost loan volumes at the start of the year.
While acknowledging the need to support credit demands, the PBOC emphasized its commitment to “reasonable growth” and “overall stability” in loan expansion. This aligns with President Xi Jinping’s call for targeted support to key areas like technology innovation, green development, and affordable housing, rather than a broad-based stimulus that could exacerbate debt concerns.
Maintaining a prudent approach, policymakers reiterated their focus on targeted support and coordination between different departments to achieve pro-growth policies. The upcoming GDP growth target for 2024, expected to be announced in March, is likely to be ambitious, considering the diminishing base effect and weakened investor and consumer confidence.
Despite the January surge, the PBOC’s cautious stance suggests a measured approach to economic stabilization. Recent actions like the 50-basis-point cut in the reserve requirement ratio and the 25-basis-point reduction in the relending rate demonstrate a willingness to provide liquidity and support specific sectors.
Leave a Reply
You must be logged in to post a comment.