Select Language:
Chinese households’ borrowing appetite weakened in November, with corporate financing remaining subdued, primarily driven by bill financing and short-term loans.
In November, the country issued CNY390 billion (USD55.3 billion) in yuan-denominated loans, a significant decrease from CNY580 billion a year earlier, according to recent data from the central bank. Analysts had previously forecasted new loans to hit CNY679.1 billion.
Household borrowing declined by CNY206.3 billion compared to the same month last year, reversing the CNY270 billion increase seen previously. Short-term loans shrank by CNY215.8 billion, compared to a CNY37 billion decline last year, while medium- and long-term loans edged up by CNY10 billion, a stark contrast to the CNY300 billion growth experienced earlier.
This decline indicates weak consumer demand and ongoing adjustments within the real estate sector. Despite the boost from the online shopping festival, short-term household loans remained under pressure, partly due to a high baseline last year when consumption subsidy policies were introduced. Additionally, the event has been starting earlier each year, preemptively pulling on credit demand.
The second-hand housing market is still focused on trading price for volume, as efforts to stabilize prices and reverse declining trends continue. Weaker overall demand and a high comparison base contributed to sharp drops in medium-to-long-term household borrowing in November.
Loans to non-financial companies and public institutions increased by CNY610 billion year-over-year, compared to a CNY250 billion rise last year. Short-term corporate loans grew by CNY100 billion in November, a reversal from a CNY10 billion decrease the previous year, mainly thanks to a surge in bill financing, which rose by CNY334.2 billion. Medium- and long-term corporate loans increased by CNY170 billion, down from CNY210 billion previously.
The slowdown in longer-term corporate borrowing mainly stems from mounting economic downward pressure since the fourth quarter, which has sharply reduced investment growth and restrained credit demand among real economy enterprises. Meanwhile, corporate bond issuance continued to grow year-over-year, possibly substituting for traditional loans and exerting downward pressure on new medium-to-long-term corporate lending.
Yuan deposits increased by CNY1.41 trillion (USD200 billion) last month from a year earlier, a slowdown from last year’s growth of CNY2.17 trillion. Household deposits rose CNY670 billion, and non-financial corporate deposits increased CNY645.3 billion, compared to last year’s increases of CNY790 billion and CNY740 billion, respectively. Fiscal deposits fell CNY50 billion, down from a CNY140 billion rise last year, while deposits from non-bank financial institutions increased by CNY80 billion—the first annual decline this year.
The rise in non-bank financial institution deposits is linked to increased household investment in financial assets, indicating a higher risk appetite and a surge in stock trading activity. However, volatility in the stock market since October has made households more cautious, likely putting downward pressure on equity trading volumes.
The fluctuations in deposit and loan segments have affected the broader money supply structure. The differential between M2 (cash and all deposits) and M1 (cash and non-bank, non-government deposits) widened to 3.1% last month, signaling continued weakness in financing demand from the real economy.
As of November 30, M2 grew by 8% year-over-year (compared to 8.2% last year), and M1 expanded by 4.9%, down from 6.2%. Analysts believe that, given current and expected economic conditions, the pattern of “weak households, growing enterprises, and a strong government” will likely persist for the next one or two quarters.
Forecasts suggest that new yuan loans during the fourth quarter could reach approximately CNY1.5 trillion, with total social financing expected to surpass CNY6.1 trillion during the period.
ChatGPT
Perplexity
Gemini AI
Grok AI
