If the loans are on offer and there is no take-up, the options available to the Central Bank to goose the economy start to get ugly. Ergo, we'll keep an eye on the fiscal side of things.
From the South China Morning Post, September 15:
Loans reverse record contraction a month earlier but fall far short of expectations as property slump drags and deposits rise
New lending by China’s banks returned to growth in August after a record contraction the previous month, but the scale remained subdued as sluggish consumption and investment continued to weigh on credit demand.
New bank loans totalled 60 billion yuan (US$8.94 billion) in August, reversing a record contraction of 340 billion yuan in July, according to data released by the People’s Bank of China on Monday.
The figure, however, fell well short of the 380 billion yuan consensus forecast among economists surveyed by Wind. For the first eight months of the year, banks extended 10.44 trillion yuan in new loans, down 22 per cent from 13.46 trillion yuan in the same period last year.
The credit figures were followed by economic data on Tuesday that pointed to deepening weakness in domestic demand. Retail sales grew just 0.4 per cent year on year in August, while fixed-asset investment fell 7.2 per cent in the first eight months, according to the National Bureau of Statistics.
Corporate medium- and long-term loans increased by about 320 billion yuan last month, compared with an increase of 470 billion yuan a year earlier, calculations based on central bank data showed.
Household credit demand remained restrained, with shrinking short-term borrowing pointing to weak appetite for consumer and business loans, while the property slump and early mortgage repayments continued to weigh on longer-term lending, according to a report by Southwest Securities on Monday.
“Loan growth is likely to remain weak, although the year-on-year decline may gradually narrow as faster fiscal disbursement and special treasury bond funding help banks increase longer-term lending for infrastructure and equipment upgrades,” the brokerage said.
Weak home sales would continue to constrain mortgage demand, the report added.
“Credit expansion in the fourth quarter may depend more heavily on policy funding, while a recovery in underlying financing demand will take time,” it said....
....MORE
Related September 9:
"Burnout Nation: Why Neijuan (Involution) Feels Pervasive in China"
There was a time when China's credit impulse was the most important number on the monthly data calendar. Now, not so much....
