New bank loans in China fell more than expected to the lowest in 22 months in October, but the drop was likely due to seasonal factors and policymakers are still expected to ramp up support for the cooling economy in coming months, reported Reuters.
Chinese regulators have been trying to boost bank lending and lower financing costs for over a year, especially for smaller and private companies which generate a sizeable share of the country’s economic growth and jobs. But domestic demand remains sluggish as investment and consumption weakens, while escalating US-China trade tensions weigh on exports, suggesting more policy stimulus is needed.
“We think the central bank will need to loosen policy more aggressively in the coming months in order to drive a turnaround in credit growth and prevent economic activity from slowing too abruptly,” Julian Evans-Pritchard at Capital Economics said in a note.
Chinese banks extended RMB 661.3 billion ($94.55 billion) in new yuan loans in October – the weakest since December 2017, data from the central bank showed on Monday, down sharply from September and falling short of analyst expectations.