Credit growth of 22% in China sets a historical record

The volume of new loans in Yuan granted by Chinese banks last March reached 2.85 trillion Yuan (370,211 million Euros), a new record in the entire historical series, which dates back to 1992, reflecting the stimulus measures implemented to revive China's economy after the standstill caused by the COVID-19 outbreak.

According to data published by the People's Bank of China (PBC), new yuan-denominated loans in March totalled 2.85 trillion yuan, an increase of 1.16 trillion yuan (150,685 million euros) over the same month in 2019.

Thus, in the first three months of 2020, new loans in the Chinese currency reached 7.1 trillion yuan (922.25 billion euros), 22% more than in the same period last year.

By sector, between January and March, household loans increased to 1.21 trillion yuan (157.193 billion euros), with short-term loans falling to 50.9 billion yuan (6.613 billion euros), while mid- and long-term household loans, largely mortgages, grew to 1.26 trillion yuan (163.697 billion euros).

On 30th March, the BPC made the biggest cut in interest rates applied to institutions involved in its short-term refinancing operations, cutting them from 2.40% to 2.20%, in order to guarantee a "reasonable and sufficient" level of liquidity in the Chinese banking system.

This was the first cut in the BPC's short-term interest rate since February and the third cut in short-term rates since November 2019.

Next week, China will release the first estimate of its Gross Domestic Product (GDP) growth, which will provide information on the impact of the coronavirus pandemic and the containment measures implemented in the second largest economy in the world. In this regard, the consensus of analysts points to a drop of 6% in activity, compared to annual growth of 6.4% in the first three months of 2019 and 6% in the fourth quarter of last year.

Lending to companies in the first quarter increased to 6.04 trillion yuan ('784,708m).

The total volume of deposits at the end of the first quarter was 206.42 billion yuan ('26.8 billion), an annual increase of 9.2%, including deposits in Yuan of 200.99 billion ('26.1 billion), 9.3% more than in the first quarter of 2019.