By Liz Lee
BEIJING (Reuters) – China’s April new yuan loans probably shrank significantly from March levels as the trade war with the United States further weighed on the market at a traditionally quiet time of the year, according to a Reuters poll on Friday.
Chinese banks are estimated to have issued 700 billion yuan ($96.58 billion) in net new yuan loans last month, less than one fifth of the 3.64 trillion yuan distributed in March, according to the median estimates of 17 economists.
Analysts at Citi Research said new credit could be soft for April, calling it a typically “low season” for loan demand. Although, M1 and M2 supply could improve, they said.
“Growth of monetary base and outstanding credit is set to jump in April with the low base from financial tightening last April kicking in,” Citi said.
The data is due to be released from May 10 to 15.
Credit demand has fluctuated in the past few months, as borrowers’ confidence tracks pledges made by Chinese policymakers to bolster an economy grappling with a prolonged property crisis, high local government debt and deflationary pressures.
A tit-for-tat tariff dispute with the United States that escalated last month, on top of already cautious household and business spending, curbed the appetite for credit.
China’s manufacturing activity contracted at the fastest pace in 16 months in April, after the U.S. tariffs snapped two months of recovery.
Still, China kept a growth target of around 5% this year, having promised more initiatives to support consumption.
Beijing stepped up efforts to cushion the economic damage caused by the trade war with the U.S. this week, announcing a raft of stimulus measures, including interest rate cuts and a major liquidity injection.
The announcements come ahead of a meeting between top U.S. and Chinese economic officials in Switzerland this weekend, seen as an opportunity to begin resolving duties on goods imports between the world’s two largest economies that have soared well above 100%.
Broad M2 money supply last month is expected to have grown 7.3%, up from the 7.0% in March.
Outstanding yuan loans probably rose 7.4% in April from a year earlier, the poll showed, matching the 7.4% pace in March.
Total Social Financing (TSF), a broad measure of credit and liquidity, likely grew to 1.22 trillion yuan in April from 5.89 trillion yuan in March, the poll showed. Any acceleration in government bond issuance could help boost growth in TSF.
The measure includes off-balance-sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.
($1 = 7.2478 Chinese yuan renminbi)
(Reporting by Liz Lee and Kevin Yao; Polling by Devayani Sathyan and Pranoy Krishna in Bengaluru and Jing Wang in Shanghai; Editing by Kate Mayberry)
