China Credit Growth Rebounds as Monetary Easing Spurs Loans

  • Aggregate financing, new yuan loans beat economists' estimates
  • Data suggests monetary easing is starting to kick in

China’s broadest measure of new credit exceeded estimates in September, suggesting the government’s efforts to boost lending are gaining traction.

Aggregate financing rose to 1.3 trillion yuan ($205 billion), from an originally reported 1.08 trillion yuan in August, according to a report from the People’s Bank of China. That exceeded the median estimate for 1.2 trillion yuan in a survey of economists.

The report suggests increased infrastructure spending from the government and five interest rate cuts since November are helping boost loan demand. The increase in lending may alleviate global concerns over China’s growth outlook, which were among reasons cited by Federal Reserve officials last month for not raising interest rates.

"The efforts that they’ve put together to stimulate infrastructure investments are beginning to pan out," said Tim Condon, the head of Asian research at ING Groep NV in Singapore. "The worry with data in July and August was that there was a downward spiral and we were in a hard landing. This allays that fear."

New yuan loans rose to 1.05 trillion yuan, compared to a median estimate of 900 billion yuan in a survey of economists. M2 money supply increased 13.1 percent from a year earlier, matching economists’ median forecast.

China monetary conditions index started to show a rebound since July.

— With assistance by Xiaoqing Pi, and Kevin Hamlin

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