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China economy
EconomyChina Economy

China outstanding bank loans fell in August, backing new moves to boost credit to support economy

  • The country’s commercial banks extended 1.28 trillion yuan (US$170.22 billion) of new loans in August
  • Aggregate financing, the broadest measure of credit support for the real economy, rose to 1.98 trillion yuan (US$278.22 billion) last month, well above expectations

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People walk past the headquarters of the Agricultural Bank of China in Beijing. New loans growth in China declined in August. Photo: AFP
Frank Tangin Beijing

The growth in China’s outstanding bank loans fell again in August, supporting the central bank’s decision to start easing credit conditions and suggesting further steps ahead to support an economy pressured by the trade war with the United States.

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The country’s commercial banks extended 1.28 trillion yuan (US$170.22 billion) in new loans in August, higher than the 1.06 trillion yuan in July, according to data released by the People’s Bank of China on Wednesday.

However, outstanding bank loans at the end of August slowed to 12.4 per cent above the year-earlier level, down from 12.6 per cent at the end of July and 13.2 per cent in August a year ago, underscoring the shortfall in bank lending as economic growth slows.

Aggregate financing, the broadest measure of credit support for the real economy, rose to 1.98 trillion yuan (US$278.22 billion) last month, well above expectations of 1.60 trillion yuan, higher than 1.01 trillion yuan in July and about the same as a year earlier.

A man speaks on the phone outside the Bank of China head office building in Beijing. Photo: Reuters
A man speaks on the phone outside the Bank of China head office building in Beijing. Photo: Reuters
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Wang Jun, chief economist at Zhongyuan Bank, said the lending data reflected long-standing concerns over domestic demand. Although expectations for further global monetary easing created the conditions for China to follow suit, Wang warned that a large-scale easing will not solve the structural problems holding credit growth in China back, such as the difficulty small businesses continue to have raising funds.
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