China’s new yuan loans are projected to have nearly doubled in November as government stimulus measures aimed at reviving economic growth began to take effect, Reuters reports.
According to a Reuters poll of 20 economists, banks are expected to have issued 990 billion yuan ($136.02 billion) in net new loans last month, significantly higher than the 500 billion yuan recorded in October.
While the November figure marks a notable increase from the previous month, it remains lower than the 1.09 trillion yuan issued in November 2022. The surge in lending reflects firmer credit demand as Beijing ramps up support for the economy, which has been weighed down by a prolonged property sector crisis and weak domestic consumption.
China’s government has intensified its policy support since late September, rolling out measures to stabilize the economy and achieve its 5% annual growth target. Key initiatives include a $1.4 trillion debt package to alleviate local government debt burdens and a series of tax incentives to stimulate home and land purchases. These moves are designed to bolster confidence in the property sector, which is a critical driver of China’s economic activity.
In addition, policymakers have hinted at further stimulus measures, with the Central Economic Work Conference — an annual closed-door meeting of top officials — set to convene later this month to discuss economic targets and policy goals for 2025.
The increase in bank lending aligns with these broader efforts to ensure credit flows more freely into the economy. From January to October 2023, banks issued a total of 16.52 trillion yuan in new loans, compared to 20.49 trillion yuan over the same period in 2022. The recent uptick in November could signal a shift toward stronger credit growth for the remainder of the year.
The broader measure of credit and liquidity in the economy, known as Total Social Financing (TSF), is also expected to have doubled in November. The poll predicts TSF will rise to 2.8 trillion yuan, up from 1.4 trillion yuan in October. TSF includes bank loans, off-balance sheet financing, and other credit sources that feed into the economy.
Growth in China’s broad money supply, or M2, is forecast to remain steady at 7.5% year-on-year in November, matching October’s pace. This reflects a continuation of efforts to maintain liquidity in the financial system to support the government’s economic goals.
Meanwhile, the total outstanding yuan loans are expected to have grown by 7.9% year-on-year in November, slightly lower than the 8% growth recorded in October.
China’s economic outlook is also being shaped by geopolitical developments, including potential changes in US trade policy. With former US President Donald Trump set to return to the White House in January, Chinese government advisers have urged authorities to adopt additional stimulus measures to buffer the economy against potential tariff hikes.
During his election campaign, Trump pledged to increase tariffs on Chinese goods by more than 60%, and he recently promised an additional 10% tariff on imports as soon as he takes office. Barclays Research has warned that these tariff threats are not just aimed at pushing China to address issues like fentanyl flows but could also signal the beginning of a broader tariff escalation.
China’s banking and economic data for November, including new loans, M2 money supply, and TSF, are due to be released between December 10 and December 15. Analysts and policymakers will be watching closely to see if the momentum in credit growth continues and whether the government’s policy measures have had the desired effect.
With the Central Economic Work Conference expected to chart China’s policy path for 2025, further announcements on additional stimulus or policy adjustments could follow. The government’s next steps will be critical as it seeks to navigate external risks, such as potential US tariff hikes, and internal challenges, like the ongoing property sector crisis and debt pressures at the local government level.
