- In July, the volume of loans doled out from Chinese banks hit their lowest amount since 2009.
- The People’s Bank of China said new loans reached 345.9 billion yuan in July, less than half the amount expected by Bloomberg economists.
- A key measure of credit also fell well below estimates in July, per Bloomberg, signaling weak demand.
Chinese banks doled out 345.9 billion yuan in new loans last month, well below the 780 billion yuan economists had expected, according to a Bloomberg report and survey.
The smaller volume signals that demand for loans is deteriorating, a point further supported by July’s sharp drop-off in aggregate financing, a measure of credit.
The data release also showed mid- and long-term loans to households, a gauge for mortgages, shrank by 67.2 billion yuan, and that loans to companies also dropped month over month in July to 271.2 billion yuan.
Additionally, the People’s Bank of China said year-on-year growth of broad M2 money supply slowed to 10.7%.
The big miss on bank lending, too, suggests that policymakers’ still have their work cut out for them as far as monetary policy. On Tuesday, the People’s Bank of China cut several interest rates in a bid to boost the economy, following a similar move in June.
Weak credit growth adds to the red flags on China’s economy that are piling up.
