China was expected to roll out more economic stimulus after credit grew at its slowest pace on record last month and property sales contracted, with Beijing seeking to stabilize flagging growth ahead of the expected hit from US tariffs. China’s central bank has already loosened monetary policy — including cuts to banks’ reserve requirements and other cash injections designed to encourage lending — in response to the growth slowdown.
That marked a policy shift from earlier attempts to stifle excess lending and contain financial risks from a decade-long debt boom. But new data suggest the impact from monetary easing has so far been muted. Broad credit — including bank loans, bonds and non-bank credit — grew at its slowest annual pace on record at 11.1 percent last month, according to central bank data released late on Tuesday. “Weakness in credit growth in October suggests that more supportive policies are needed,” Betty Wang, senior China economist at ANZ, said on Wednesday.
“How to effectively channel funds to the private sector is still a challenge to policymakers.” Chinese exports have remained strong so far this year, despite US President Donald Trump’s imposition of duties on $250bn of Chinese goods, but an export slowdown is expected to appear by early next year and add to the economic challenge facing President Xi Jinping and the ruling Communist party. Senior leaders have launched a rhetorical offensive to address concerns that the government does not support — or is even hostile to — private companies.
Guo Shuqing, the top banking regulator, last week called on banks to devote half of all new lending to private companies over the next three years. But after bank shares fell on worries that the authorities would force banks to make risky loans, official media clarified that Mr Guo’s remarks were not intended as a binding target.