New bank lending in China likely slowed in July, a Reuters poll showed, reinforc...
BEIJING - New bank lending in China likely slowed in July, a Reuters poll showed, reinforcing expectations that policymakers will need to announce more support measures in coming months to stabilize the cooling economy as U.S. trade pressure builds.The rapidly worsening trade dispute, rising borrowing costs, and this week’s sudden drop in the yuan have fanned worries that the world’s second-largest economy could face a sharper slowdown.
The People’s Bank of China has been pressing lenders for over a year to extend more help to cash-strapped companies and offer more medium- to long-term loans to the manufacturing sector. But banks are reluctant to lend to private sector firms due to the uncertain business outlook and rising defaults.
July also saw renewed worries over bad debts at China’s smaller banks, after regulators sought to restructure the troubled Bank of Jinzhou due to liquidity problems. However, there were no reported spikes in short-term borrowing costs or interbank funding crunches like those which occurred in late May and June after regulators took over Baoshang Bank.Analysts expect total social financing , a broad measure of credit and liquidity in the economy, to fall to 1.5 trillion yuan in July from 2.
But local governments are already close to exhausting their annual bond quotas and special bond issuance dropped back last month as a result, Capital Economics said in a note. Highlighting debt concerns, the Politburo, a top decision-making body of the Communist Party, took the unusual step last month of announcing it would not use the property market as a form of short-term stimulus.
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