2021 Lending Expected to Breach 20 Trillion Yuan amidst Post-COVID Financial Inclusion and ESG Drive

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Leading domestic analysts expect full year lending in 2021 to exceed 20 trillion yuan (approx. USD$3.08 trillion), amidst a push for increased financial inclusion and the “structural optimisation” of credit in the wake of the onset of the COVID-19 pandemic.

Analysts foresee an expansion in the vigour of lending over the next several months, after Chinese central bank governor Yi Gang (易纲) called for “firmly driving lending structure adjustments and expanding support for key areas and weak links” at a meeting convened on 23 August to analyse monetary and credit conditions.

General consensus is that lending will exceed 20 trillion yuan for full year 2021, amidst this push for greater lending to green projects and small businesses in China.

“This requires that bank loan funds provide coordinated support, and we forecast that full year new loans will exceed 20 trillion yuan, for an expansion compared to last year,” said Wen Bin (温彬), chief researcher with China Minsheng Bank.

“We forecast that full year new renminbi lending can be expected to breach 20 trillion yuan, and total social financing will remain stable in general at 31 trillion yuan,” said Wang Yifeng (王一峰), chief financial sector analyst with Everbright Securities.

According to Wang new focal areas for lending will include driving more balanced lending across Chinese regions, as well as the big state-owned banks taking the lead in increasing on-balance sheet loan quotas.

Ren Tao (任涛), special researcher with the National Institution for Finance & Development (NIFD), said that over the next several months new lending would stay consistent with average levels from 2018 to 2020, and that government bond issuance with significantly accelerate.

Ren expects new renminbi loans from August to December to reach around 6.5 trillion yuan, for full year new renminbi loans of approximately 20 trillion yuan.

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