China’s banking sector has extended a substantial 11.14 trillion yuan (approximately $1.54 trillion) in new yuan-denominated loans during the first five months of 2024, according to data released by the People’s Bank of China, the nation’s central bank, on Friday.
This significant uptick in lending reflects the country’s ongoing efforts to stimulate economic growth and support the real economy. The broad measure of money supply, known as M2, which includes cash in circulation and all deposits, increased by 7% year-on-year, reaching 301.85 trillion yuan by the end of May.
However, the narrow money supply, or M1—which covers cash in circulation plus demand deposits—stood at 64.68 trillion yuan at the end of May, marking a 4.2% decrease from the same period last year. In contrast, the M0, representing the amount of cash in circulation, rose by 11.7% year-on-year to 11.71 trillion yuan.
Newly added total social financing, a broad measure of funds that the real economy receives from the financial system, amounted to 14.8 trillion yuan in the first five months of the year. This figure represents a decrease of 2.52 trillion yuan compared to the same period in the previous year, indicating a cautious approach to financing amid a complex economic landscape.
Lian Ping, director of the Chief Industrial Research Institute of Guangkai, commented on the loan growth data, stating that it aligns with the operational needs of China’s economy. “The next step is to ensure a balanced allocation of credit systems throughout the year and avoid excessive concentration or shortages during certain periods,” Lian was quoted as saying by the Securities Times.
Analysts suggest that the increase in new loans demonstrates the banking sector’s commitment to supporting businesses and infrastructure projects, which are pivotal for China’s economic stability and growth. The data also underscores the central bank’s monetary policy stance aimed at maintaining liquidity and fostering a favorable environment for economic recovery.
As China navigates the post-pandemic recovery, the surge in new yuan loans signifies a proactive fiscal strategy designed to bolster domestic demand and stimulate key sectors. Observers will be watching closely to see how these financial measures translate into sustained economic momentum in the coming months.
Reference(s):
China's January-May new yuan loans rise to 11.14 trillion yuan
cgtn.com
