Dec 12, 2018 (China Knowledge) - China’s bank loans exceed the expected level in November as banks increase lending to support economic growth. According to the People’s bank of China (PBOC), new loans increased to RMB 1.25 trillion in November beating the forecast of RMB 1.2 trillion.
Total social financing (TSF), which measures financing channels available, increased to RMB 1.52 trillion in November from RMB 728 billion in October. In addition, M2 money supply also increased by 8% YoY.
The increase in the number of new loans reflects the monetary easing measures authorities have taken to stimulate the economy and manage headwinds. China has shifted towards strengthening corporate financing to boost sentiments in its private sector.
As of early December, the PBOC has cut bank’s reserve ratio requirement (RRR) four times for a total of 250 basis points to inject liquidity into the economy and keep interbank rates low and yields on government and corporate bonds.
Authorities may continue to increase bank loan quotas and encourage lending to the private sector in order to support country’s real economy as this would increase system liquidity in China and the repayment ability among borrowers.
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