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China’s lending is expected to have fallen 50% in April; the data will be published today

The timing of the release of this Chinese data is not certain, but today it is likely.

  • New yuan loans expected at CNY 1,515bn, previously CNY 3,130bn
  • Total social financing, was previously CNY 4650bn
  • M2 money supply, before +9.7%

Via ING, why new loans are expected to have plummeted in the month:

  • We expect the April loan data to be released today, and we expect it to come in at about half the volume of March. This drop is mainly due to the Covid lockdown in Shanghai, which has slowed loan processing due to logistics delays and has also weakened loan demand. This weaker credit environment could remain the case for a few months to come.
  • Although regular government meetings suggest cutting funding costs to boost the economy, banks are currently risk-averse and lower interest rates may not help create new loans. However, lower interest rates could help existing borrowers. The regular government meeting also proposes using REITS to leverage existing infrastructure to obtain financing for new infrastructure projects. Another proposal is to subsidize new energies as well as increase the supply of coal to avoid electricity cuts. The message is clear: economic growth is the top priority, although this goal must be pursued without relaxing Covid measures for now.

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