Well, it’s starting to look like a feature and not a bug anymore. The latest credit data for the month of July sees China new bank loans fall into contraction again, shrinking by ¥340 billion. That is a miss on expectations, which were expecting lending to increase by ¥45 billion instead.
That is a rather disappointing estimate and sees new yuan loans from January to July total to just ¥10.38 trillion. That is a marked fall compared to the ¥12.88 trillion total from January to July last year.
This marks back-to-back July months now that China new bank loans have contracted. While it may be tied to some seasonal factors, weak household credit demand cannot be understated in being a drag on lending in the Chinese economy.
Once again, data like this will just continue to cast doubts over the resilience of the Chinese economy despite the fact that top-level data continues to indicate that “everything is fine”.
While the property market crisis did lead to some slowdown in credit demand, the collapse in short-term borrowing by households is definitely starting to be more pronounced in recent months. So, this will be something to look out for if it continues as it does as seen above.
This article was written by Justin Low at investinglive.com.
