According to the report from the People's Bank of China (PBoC), in December, Chinese banks provided new loans in yuan in the amount of 1.170 trillion yuan. Thus, credit growth accelerated compared to November (1.090 trillion yuan). However, economists had expected lending to grow by 1.4 trillion yuan.
Meanwhile, total social financing grew by 1.940 trillion yuan compared to an increase of 2.450 trillion yuan in November. Consensus estimates suggested an increase by 2.20 trillion yuan.
The PBoC said that in November, M2, the widest measure of money supply, rose by 9.7% per annum, slowing compared to November (+10.0%), and falling below economists' forecasts (+10.1%). Outstanding loans in yuan increased by 10.6% per annum (the weakest growth since the beginning of 2023) after an increase of 10.8% in November. Consensus estimates suggested an increase by 10.8% per annum.
China's central bank has said it will ensure rapid and sustained credit growth during 2024, aiming to boost corporate borrowing and money supply expansion. However, the ongoing recession in the real estate sector, which once accounted for almost a third of all loans, continues to put pressure on demand for borrowing. Residents are reluctant to take out mortgages because the prospects for income and housing prices are uncertain.