China March new bank loans rise but broad credit growth eases

New bank loans in China rose more than expected in March from the previous month due to strong corporate and household demand, as the central bank walks a tightrope between supporting the rapidly recovering economy and containing debt risks.

Chinese banks extended 2.73 trillion yuan (US$416.62 billion) in new yuan loans in March, down by 103.9 billion yuan year on year but up from 1.36 trillion yuan in February, exceeding analyst expectations of 2.45 trillion yuan, according to data released by the People’s Bank of China on Monday.

That pushed bank lending in the first quarter to a record high of 7.67 trillion yuan, according to Reuters’ calculations based on central bank data. It beat the previous peak of 7.1 trillion yuan in the first quarter of 2020, when policy-makers began rolling out unprecedented measures to deal with the shock from the coronavirus crisis.

Despite the March surge, growth in outstanding yuan loans eased to 12.6 percent from a year earlier compared with 12.9 percent in February.

Growth of outstanding total social financing, a broad measure of credit and liquidity in the economy, slowed to 12.3 percent in March from a year earlier and from 13.3 percent in February.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.

The central bank has pledged to stabilize the country’s overall debt level which jumped last year due to stimulus measures, but has said it will avoid a sudden policy shift.