China's credit shrinks for the first time
Finance | Bloomberg 13 May 2024
China's credit in April shrank for the first time as government bond sales slowed, while loan expansion was worse than expected in a sign of weak demand.
Aggregate financing, a broad measure of credit, fell by almost 200 billion yuan (HK$216.25 billion) in April from the previous month, according to Bloomberg calculations of data released by the People's Bank of China. That's the first time the measure has declined since comparable data began in 2017, reflecting a contraction in financing activity. Looking back further, using a smaller data set that excludes things like government funding, it was the first decrease since October 2005, according to Bloomberg Economics.
A breakdown of the data shows that more government bonds were repaid than sold in the month, contributing to the decline. Financing from shadow banking - which refers to activities outside the formal banking system - also recorded a drop, weighing on overall credit.
Financial institutions offered 731 billion yuan of new loans in April, lower than a projected 916 billion yuan. The year-on-year growth rate of outstanding loans edged down to 9.1 percent from 9.2 percent in March.
"The volatility in this month's data is tolerable because the government will issue ultra-long government bonds soon, so credit expansion in May and June may make up for it," said Bruce Pang, chief economist for Greater China at Jones Lang LaSalle.
