New Chinese yuan lending in August rebounded from 9-month low

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BEIJING (Reuters) – China’s new yuan loans are expected to rebound in August from the nine-month low recorded the previous month, a Reuters poll showed, as the central bank seeks to support the country’s economic recovery.

Banks are estimated to have issued 1.30 trillion yuan ($ 201.21 billion) in new net loans in yuan last month, up from 1.08 trillion yuan in July, according to the survey’s median estimate. conducted among 31 economists.

This would be higher than the 1.28 trillion yuan issued in the same month a year earlier.

Short-term easing expectations have cooled after comments from central bank officials that China will maintain a cautious monetary policy.

Central bank vice-governor Pan Gongsheng said on Tuesday that China would maintain a cautious monetary policy and not resort to flood-like stimulus measures.

Sun Guofeng, head of the central bank’s monetary policy department, said there was no shortage of base currency or liquidity and demand would remain essentially balanced in the coming months.

In July, the PBOC reduced the reserve requirement ratio (RRR) of banks, freeing up about 1,000 billion yuan in long-term liquidity. Analysts expect the RRR to cut again this year.

The annual outstanding yuan loans are expected to increase 12.3% in August, as in July, according to the survey. The growth of the broad money supply M2 in August was 8.4%, compared to 8.3% the previous month.

Chinese local governments issued a net amount of 1.3546 billion yuan of special bonds in the first seven months of 2021, according to data from the Ministry of Finance.

The issuance of special local bonds in the second half of 2021 will be higher than a year earlier and the government will work to issue 2022 special local bonds quickly, a state planner official said on Wednesday.

Any acceleration in government bond issuance could help boost Total Social Finance (TSF), a general measure of credit and liquidity. TSF’s exceptional growth slowed to 10.7% in July, from an almost three-year high of 13.7% in October 2020.

In August, TSF is expected to jump to 2.75 trillion yuan, from 1.06 trillion yuan in July.

($ 1 = 6.4610 Chinese yuan)

(Reporting by Judy Hua and Kevin Yao; Editing by Sam Holmes)


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