Housing’s Share of New RMB Lending Recedes in Q1 2017

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The latest data from China’s central bank indicates that new housing fell off as a percentage of total lending in the first quarter of 2017, while loans to enterprises posted a marked increase.

Figures released by the People’s Bank of China (PBC) indicate that new RMB loans in China reached 4.22 trillion yuan during the first quarter, falling short of analysts’ expectations with a 385.6 billion yuan year-on-year decline.

Mortgage-dominated medium and long-term housing loans declined as percentage of all new lending, falling by 10.3 percentage points to 34.6% of the total.

The real estate lending balance was 28.39 trillion yuan as of the end of March, for year-on-year growth of 26.1%, and an easing in growth of 0.9 percentage points compared to the end of 2016.

According to analysts the dial down in housing credit as a share of total lending is due to a fall in real estate sales resulting from policy restrictions on property purchases and loans, as well as increases in the amount of time required for banks to extend credit.

In sharp contrast medium and long-term loans to enterprises have increased their share of new lending, accounting for 63.3% as of the end of March, for a rise of 30 percentage points compared to the end of last year.

The rise in lending to enterprises has received a boost from investments in manufacturing operations and fixed assets, particularly in the Pearl River Region, which has a highly developed manufacturing sector and is benefiting from industry upgrades.

The share of lending to the real economy is expected to further increases in 2017 on the back of PPP infrastructure projects.

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