BEIJING (Reuters) – New bank lending in China fell sharply in October from the previous month, but not quite as badly as forecast by analysts who expect the central bank to ease monetary policy cautiously due to risks of stagflation.
Data released by the People’s Bank of China on Wednesday showed banks extended 826.2 billion yuan ($129.27 billion) in new yuan loans in October, down sharply from 1.66 trillion yuan in September and but better than the fall to 800 billion yuan that analysts polled by Reuters had expected.
The new loans were higher than 689.8 billion yuan a year earlier.
Central Bank Governor Yi Gang said last month that growth of China’s money supply and total social financing were largely in line with nominal GDP growth, and liquidity is ample.
The People’s Bank of China (PBOC) will likely move cautiously on loosening monetary policy to bolster the economy, as slowing economic growth and soaring factory inflation fuel concerns over stagflation, policy sources and analysts said.
China’s factory gate inflation hit a 26-year high in October as coal prices soared amid a power crunch in the country’s industrial heartland, further squeezing profit margins for producers and heightening stagflation concerns.
Broad M2 money supply grew 8.7% from a year earlier, the central bank data showed, above estimates of 8.3% forecast in the Reuters poll. M2 rose 8.3% in September.
Outstanding yuan loan grew 11.9% from a year earlier compared with 11.9% growth in September. Analysts had expected 11.9% growth.
Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, was at 10.0% in October, unchanged from September.
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.
In October, TSF fell to 1.59 trillion yuan from 2.9 trillion yuan in September. Analysts polled by Reuters had expected October TSF of 1.6 trillion yuan.
(Reporting by Judy Hua and Kevin Yao; Editing by Simon Cameron-Moore)
