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Pekin (Reuters) – New bank lending in China likely increased slightly in May after decelerating the previous month as the central bank tried to boost credit growth following the escalation of the US-led trade war. United and China.
Contrary to market expectations, the Chinese economy has not yet landed, despite the many stimulus measures put in place since last year, and Beijing should further relax its policy in the coming months to strengthen business confidence .
Chinese banks are expected to have granted 1,225 billion yuan (139.7 billion pounds) of new net lending in yuan, compared with 1.02 trillion yuan in April and more than 1.15 trillion yuan in the same month of last year, according to a median estimate in a survey of 20 economists have shown.
Frustrated by the lack of progress in trade talks with China, US President Donald Trump last month raised tariffs on Chinese goods worth $ 200 billion and threatened to lower tariffs up to 25% on additional Chinese imports of $ 300 billion, pushing Beijing to respond.
The International Monetary Fund (IMF) cut its economic growth forecast for China for 6.2% to 6.2% on Wednesday due to increased uncertainty over trade frictions, saying that further easing of monetary policy would be warranted if the commercial war was intensifying.
Earlier last month, the People's Bank of China (PBOC) announced a three-phase reduction in the reserve requirement ratio for regional banks to reduce the costs of financing small businesses. the PBOC has now delivered six RRR since the beginning of 2018, this ratio has been lowered to 13.5% for large banks and 11.5% for small and medium-sized lenders.
The growth of outstanding yuan loans on an annual basis has probably remained stable at 13.5% compared to April and broad money M2 broadly increased to 8.6% year-on-year. , after 8.5% in April, reveals the survey.
TSF, a global measure of credit and liquidity in the economy, reportedly reached 1.41 trillion yuan in May, up from $ 1.36 trillion the previous month.
TSF includes off-balance sheet forms of financing that exist outside the traditional bank loan system, such as initial public offerings, trust company loans and bond sales.
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The central bank injected the most money into the banking system in late May to stabilize the money markets after the takeover of troubled regional lender Baoshang Bank, the first takeover by a state bank in two decades.
the PBOC sought to calm investors by claiming that Baoshang was a stand-alone affair, but that decision added to concerns over rising bad debts and systemic financial risks, as Washington exacerbated trade pressure and continued economic slowdown .
Corporate bond failures in China are on track for another record year.[nL5N22B7PG.]
Bank of America badyst Merrill Lynch said on Tuesday that it expects US and Chinese central banks to lower domestic interest rates over the next few months, as economic spillover from the war commercial activities intensify.
According to them, the Federal Reserve would reduce major US borrowing costs by 75 basis points by the beginning of 2020, starting in September, leaving room for PBOC lower rates twice in 2019 and once in 2020 with less risk of capital outflows.
Factories activity in May was lower than expected due to weaker demand at home and abroad, an official survey revealed last week, adding that more support is urgently required. said badysts.
While the PBOC has guided downward interest rates over the last year by various means, many badysts believe that it has less flexibility to relax its policy after the reduction. RRRs and aggressive interest rates in past recessions
Stronger easing measures and a sharp increase in liquidity would increase debt risks and put more pressure on the yuan, which fell 2.5% against the dollar in May due to unexpected deterioration trade negotiations.
(Report by Lusha Zhang and the Beijing Monitoring Bureau, edited by Kim Coghill)
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