China’s bank loans expanded at the slowest pace on record in February, underscoring a weakness in borrowing demand despite the central bank taking steps to ease policy and help the economy, reports Caixin. The stock of yuan loans grew 9.7% in February from a year ago, the lowest in data going back to 2003, according to figures released by the People’s Bank of China (PBOC) on Friday. It was also the first time the rate had dropped below 10%.
The stock of aggregate financing—a broad measure of credit—expanded only 9%, also near a record low. The M1 money supply measure, which includes cash in circulation and corporate demand deposit, weakened to 1.2%, the lowest since January 2022. That indicator is closely watched, and signals that companies are not planning to use money in the near-term to invest or expand production.
“The key problem is demand in the real economy, and that can’t be solved just by monetary policy,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Plc. “Markets may have to lower expectations for further credit growth.”