China’s new yuan lending to seven yuan rises on political support: Reuters poll

BEIJING (Reuters) – China’s new yuan lending is expected to rise in September from August, a Reuters poll shows, as the central bank seeks to stimulate an economy hampered by a property crisis and a resurgence in COVID cases. -19.

Chinese banks are estimated to have issued 1.8 trillion yuan ($253.04 billion) in net new yuan loans last month, up from 1.25 trillion yuan in August according to the survey’s median estimate. 24 economists.

That would be higher than the 1.66 trillion yuan issued the same month a year earlier.

The world’s second-largest economy has gained momentum in recent months after narrowly escaping a contraction in the second quarter, but the recovery remains shallow as COVID outbreaks and a deepening housing crisis weigh on the outlook.

China’s central bank said in late September it would step up efforts to shore up an economic recovery, citing a host of risks to the global economy while pledging to implement prudent monetary policy and maintain reasonably ample liquidity. .

In August, the central bank cut the one-year loan prime rate (LPR), its benchmark lending rate, by 5 basis points, and lowered the five-year LPR by a larger margin.

The central bank also cut the interest rate on housing provident fund loans by 15 basis points for first-time homebuyers from October 1, suggesting there is an urgent need for policymakers to support the struggling real estate market.

China has also allowed some local governments to ease the floor on mortgage rates for first-time home buyers.

Outstanding yuan loans are expected to rise 10.9 percent in September from a year earlier, similar to August, according to the survey. Broad M2 money supply growth in September was estimated at 12.1%, down from 12.2% in August.

As the central bank faces limited room to ease policy amid concerns over capital flight, authorities are stepping up efforts to bolster infrastructure, dusting off an old playbook by issuing debt to fund major public works projects to revive the economy.

Local governments issued a net 3.52 trillion yuan of special bonds in the first eight months, according to data from the Ministry of Finance, as authorities accelerated the issuance of special infrastructure bonds to to support the economy.

Any acceleration in government bond issuance could help boost total social finance (TSF), a large measure of credit and liquidity. TSF outstandings increased by 10.5% in August against 10.7% in July.

In September, the TSF is expected to reach 2.73 trillion yuan from 2.43 trillion yuan in August.

($1 = 7.1136 Chinese yuan renminbi)

(Reporting by Judy Hua and Kevin Yao; Editing by Christian Schmollinger)

Copyright 2022 Thomson Reuters.

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