New Credit Expected to Fall to 800bn Yuan in October


Chinese analysts expect a significant decline in new credit for October on the back of standard seasonal fluctuations.

According to the consensus forecast amongst Chinese analysts for new credit in October is around 800 billion yuan, for a decline of nearly 40% compared to the reading of 1.27 trillion yuan for September, yet far ahead of 651.3 billion yuan for the same period last year.

A total of 11.16 trillion yuan in new RMB credit was extended in China for the first nine months of the year, equal to 88.22% of the full year figure for 2016.

Given the central government’s ongoing deleveraging campaign and the steady monetary stance maintained by the People’s Bank of China, analysts generally anticipate new credit to only slightly exceed last year, with a pronounced decline in the final quarter.

According to one analyst the sizeable decline in new credit for October does not point to a significant drop in demand in the real economy, but is instead the result of the seasonal fluctuations that characterise the Chinese finance system, with credit quotas becoming scarce in he fourth quarter.

For this reason September always sees a marked uptick in lending, and October usually comes in behind the preceding month.

September this year saw 1.27 trillion yuan in new credit extended, well above the figure of 1.09 trillion for August.

September also saw new credit roughly equally split between households and enterprises, as policymakers endeavour to balance out the economy and give greater play to consumption.

The domestic media has reported that a great deal of consumer credit is actually flowing into the property market, however, prompting widespread crackdowns by local authorities in Beijing, Jiangsu and Shenzhen.

Huatai Securities chief analyst Li Chao (李超) said that the marginal change in new credit for October will be primarily due to marginal changes in household consumer borrowing.

Since last year consumer loans have expanded too rapidly, and Li expect consumer loans to meet with significant setback in October.