Beijing: Chinese bank lending rose five fold month-on-month in January, reflecting Beijing’s desire to support economic growth while continuing to strengthen financial infrastructure and keeping debt in check.
Banks in the world’s second largest economy approved new loans worth a record 2.9 trillion yuan (around $458 billion) in January, the People’s Bank of China (PBOC) said Monday.
This was a dramatic jump from December, when 584 billion yuan of loans were granted.
An upsurge in lending was expected, as banks are issued fresh loan quotas at the start of each year, but the figure far exceeded analysts’ predictions.
A rush of new loans are usually handed out in January, particularly to large and state-owned companies, to avoid share losses and to maximise profits.
Adding to this annual phenomemon may be a government crackdown on unregulated “shadow banking”, which has driven more companies to seek traditional bank loans.
Commercial banks have traditionally been reluctant to loan money to small and medium-sized businesses, regardless of interest rate cuts, leaving owners with little choice but to turn to “shadow financiers” to quench their thirst for liquidity.
The leap in loans is also in line with China’s wish to avoid stifling economic growth despite a credit slowdown.