New bank loans in China surged to a record high of 5.13 trillion yuan ($706.40 billion) in January, surpassing analysts’ forecasts of 4.5 trillion yuan, as the central bank moved to support a patchy economic recovery. This sharp increase, more than quadrupling December’s figure, reinforces expectations for further stimulus in the coming months, especially as U.S. tariffs add pressure on the economy.
Data from the People’s Bank of China revealed that household loans, including mortgages, rose to 443.8 billion yuan in January from 350 billion yuan in December, while corporate loans jumped to 4.78 trillion yuan from 490 billion yuan. Despite the surge in new loans, year-on-year lending growth hit a record low.
Broad M2 money supply grew 7.0% year-on-year in January, slightly below the forecast of 7.2%, while the narrower M1 money supply climbed 0.4% from a year earlier. The central bank has pledged to adjust its policy stance, using tools such as interest rates and bank reserve requirement ratios (RRR), to support economic growth amid rising external headwinds.
The Chinese economy grew by 5% in 2024, meeting the government’s target, but the recovery has been uneven, with exports and manufacturing compensating for weak domestic consumption. To sustain growth, Beijing has committed to higher fiscal spending, increased debt issuance, and further monetary easing.
As the U.S.-China trade tensions escalate, with new tariffs imposed by both sides, Beijing has introduced measures, including interest rate cuts and a 10 trillion yuan debt relief package for local governments, to get the economy back on track. Analysts expect further policy easing, including cuts in interest rates and RRR, in the near future.
The upcoming annual parliament meeting in March is anticipated to unveil fresh stimulus measures and economic targets, reflecting the government’s continued efforts to bolster the economy.