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China Money March 2023

China: Credit data beats expectations in March

In March, Chinese banks distributed CNY 3890 billion in new yuan loans, up from February’s 1810 billion figure and beating market expectations. Meanwhile, the stock of total social financing (TSF)—a broader measure of credit and liquidity in the economy that includes loans, bonds and other non-traditional instruments—expanded 10.3% in the month (February: 10.2% yoy). Money supply grew 12.7% compared to the same month of the previous year in March, which was a deterioration from February’s 12.9% increase.

March’s credit data was bolstered by corporate loans. Moreover, loans to households surged, with long-term household loans reaching an over one-year high in line with a recovering property market.

However, Nomura analysts were somewhat downbeat on the outlook:

“Despite the strong credit readings in March, we are concerned that the surge in new mortgage loans could be short-lived, as new home sales weakened significantly in early April. Another concerning point is new household deposits, which increased further to RMB2.9trn in March from RMB2.7trn a year ago and suggest households might still be cautious when making financial and property investment decisions. Rising deposits could be one driving force behind the recent deposit rate cut among small local banks.”

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