China's January Bank New Loans Reach Record High of 910 Trillion

As Chinese authorities strive to stimulate the economy, foreign media reported on the 9th that new yuan loans by local banks in January reached a record high of approximately 910 trillion won.

People's Bank of China

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According to data released by the People's Bank of China cited by foreign media on that day, new yuan loans by Chinese banks in January amounted to 4.92 trillion yuan (about 909.6 trillion won), a significant increase from 1.17 trillion yuan (about 216 trillion won) in the previous month. This exceeded the market forecast of 4.5 trillion yuan and surpassed the previous record of 4.9 trillion yuan in January of the previous year.

Most of the household loans, which are primarily mortgage loans, increased from 222.1 billion yuan in December last year to 980.1 billion yuan (about 181 trillion won) in January. Corporate loans surged from 891.6 billion yuan in December to 3.86 trillion yuan (about 713.6 trillion won) in January.

Last year, Chinese banks recorded a total of 22.75 trillion yuan (about 4206 trillion won) in new loans, a 6.8% increase from the previous year. However, due to a weak economic outlook, consumers and businesses were reluctant to take on more debt, causing the loan growth rate in December last year (compared to the same month the previous year) to fall to its lowest level in over 20 years.

China's economy grew by 5.2% year-on-year last year, the first year of the 'With COVID-19' policy, partly due to the base effect. However, concerns over a real estate slump, local government debt issues, weak consumption, and deflation (falling prices amid economic downturn) have led to forecasts that growth will remain in the 4% range this year.

Chinese authorities are attempting to inject vitality by expanding liquidity in both real estate and domestic demand. They have encouraged lending by commercial banks while keeping the loan prime rate (LPR), the de facto benchmark interest rate, unchanged for five consecutive months.

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