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In a sign that the trade war is hurting Chinese business, lending in July fell on weak demand. Grace Zhu reports in The Wall Street Journal:
Lending by Chinese financial institutions slumped in July on weakening demand, signaling further economic headwinds from trade tensions with the U.S. and potentially paving the way for more stimulus efforts by Beijing’s policy makers.
Chinese banks issued 1.06 trillion yuan ($150.2 billion) of new yuan loans in July, down from 1.66 trillion yuan in June, the People’s Bank of China said on Monday—lower than the median forecast of 1.25 trillion yuan by economists polled by The Wall Street Journal.
A protracted trade war with the U.S. has dented market confidence as companies scale back investment plans amid increasing uncertainties, reducing their borrowing needs.
“The lower-than-expected credit growth reflects weak demand in the real economy,” said Liu Xuezhi, an economist with Bank of Communications.
Total social financing, a measure of credit in the economy, stood at 1.01 trillion yuan in July, as some nonbank financial institutions withdrew credit they issued earlier. In June, total social financing was at 2.26 trillion yuan.
According to official data, the sharp month-over-month pullback was largely the result of steep declines in entrusted loans, trust loans and undiscounted bankers’ acceptances—unconventional loans known as “shadow bank lending.” The contraction may reflect a recent regulatory crackdown on shadow financing to property developers, economists say.
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