Credit provision speeds up in December

Latest reading: In December, Chinese banks distributed CNY 990 billion in new yuan loans, up from November’s 580 billion figure and overshooting market expectations. Money supply rose 7.3% in year-on-year terms in December, which followed November's 7.1% increase. 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—increased 8.0% in the month (November: 7.8% yoy).

Panelist insight: Digging deeper into the latest data, Nomura analysts said: “The upside surprise in new RMB loans was mainly driven by a jump in bill financing, which suggests credit demand from the real economy might remain soft. New medium to long-term loans to the corporate sector slumped to their lowest level since 2016, […]. Going forward, the drag on y-o-y credit growth from regulators’ efforts to crack down on inflated loan data is likely to subside, while the debt swap programme may continue to weigh on outstanding loan growth.”

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