The official news publication of the People’s Bank of China (PBOC) says that Chinese lending saw marked structural improvements in 2019.
PBOC’s Financial News reports that 2019 saw the launch of a slew of monetary policy transmission mechanisms and measures to strengthen the ability of banks to service the real economy, which have already led to marked improvements to the lending structure.
“Overall, China’s financial markets saw stable operation in 2019, with the financial sector increasing its ability to support the real economy, and the [lending] structure continuing to optimise,” said Wen Bin (温彬), chief banking sector researcher with China Minsheng Bank, to Financial News.
“In the next stage, under the precondition that moderate flexibility be maintained, the focus of monetary policy will be clearing our monetary policy transmission mechanisms, and effectively employing the market-based role of the loan prime rate.”
Chief amongst the improvements to China’s lending structure include expansions in business loans (公司类贷款) and an increase in the share of medium and long-term loans.
“As of the end of December 2019 the renminbi lending balance was 153.11 trillion yuan, for a YoY rise of 12.3%, and a deceleration of 1.2 percentage points compared to the previous year,” said Wen.
“However, the lending structure has further optimised. First is an expansion in business lending – in particular an expansion in lending to private and micro-and-small enterprises (MSE).
“New business loans as a share of all new lending were 56.2%, for an increase of 4.83 percentage points compared to the previous year.”
“Second is an increase in the share of medium and long-term lending – new medium and long-term loans accounted for a 67.4% share of all new lending, for a rise of 2.16 percentage points compared to the end of the previous year.”