Chinese banks are expected to channel more funds to the advanced manufacturing sector, micro-enterprises and financial inclusion areas, as regulators tighten curbs on real estate credit and drive home loan rates higher.
Recent data indicates that the first home loan rates offered by Chinese banks have risen to between 5 – 15% above the benchmark rate in major cities around the country, as regulators stymie lending to the real estate sector, and the China Banking Regulatory Commission stresses concern over the potential for property bubbles.
Analysts expect rising capital costs in tandem with the return of non-standard assets to bank balance sheets as a result of China’s shadow banking crackdown to drive interest rates even higher, and the dissemination of credit to undergo a marked shift.
According to state-owned financial news outlet China Securities Journal banks funds are highly likely to flow towards advanced manufacturing, financial inclusion and micro-enterprises in 2018.
Chinese bank are also likely to expand credit card lending and consumer finance in a bid to drive revenues higher.
Executives at multiple banks situated in China’s Yangtze River Delta economic hub said to the Journal that they currently favour advanced manufacturing enterprises or projects involved with the China Manufacturing 2025 initiative.
A survey of bank loan officers recently conducted by Huachuang Securities found that most planned to expand credit extension to the manufacturing sector, while cutting back on lending to government projects and real estate developments.
Data from the China Banking Regulatory Commission indicates that manufacturing sector loan growth for the first 11 months of 2017 accelerated by 17 percentage points compared to the same period in 2016.