According to the report from the People's Bank of China (PBoC), in October, Chinese banks provided new loans in yuan in the amount of 0.500 trillion yuan. Therefore, credit growth slowed sharply compared to September (1.590 trillion yuan), despite the economic stimulus measures from the Chinese government. It was the lowest magnitude of new yuan loans extended in the period since 2009. Economists had expected lending to grow by 0.700 trillion yuan. New yuan loans totalled 16.52 trillion yuan for the first ten months of the year.
Meanwhile, total social financing grew by 1.400 trillion yuan, compared with an increase of 3.760 trillion yuan in September. Consensus estimates suggested an increase of 1.545 trillion yuan.
The PBoC said that in October, M2, the widest measure of money supply, rose by 7.5% per year, accelerating compared to September (+6.8% per annum). Economists had expected growth of 6.9%. Outstanding loans in yuan rose by 7.8% per year (the lowest increase on record) compared with +8.1% per annum in September. Consensus estimates suggested an increase of 8.0% per annum.
Last week, the government unveiled a 10 trillion yuan debt package to ease local government financing strains and stabilize flagging economic growth. However, experts are skeptical that these steps will lead to a short-term increase in economic activity, since most of the new funds will be used to reduce the debt of local authorities.