China Credit Engine Goes Into Reverse, Piles Pressure on Beijing
- Government flags fiscal stimulus as loans unexpectedly shrink
- Analysts see PBOC cut in reserve requirement, maybe this month
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China’s shock credit contraction is adding pressure on the government to spend more money — and on the central bank to help.
Last month’s decline in aggregate financing, the broadest measure of credit, was the first in almost two decades. With private borrowers and local authorities largely tapped out, the central government signaled Monday it’s ready to step in with a spending boost. The Finance Ministry said it will start selling the first batch of 1 trillion yuan ($138 billion) in ultra-long special bonds on Friday, raising funds that can be used for infrastructure investments.