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China’s new yuan loans seen dipping in Oct, policy support goes on – Reuters poll

China’s new bank loans are expected to fall sharply in October from the previous month, but are likely to be higher than a year earlier, as the central bank maintains policy support for the economy because of the global pandemic.

Chinese banks are estimated to have issued 800 billion yuan ($121.77 billion) in net new yuan loans last month, compared with 1.90 trillion yuan in September, the median estimate in a Reuters survey of 26 economists found.

That would be higher than 661.3 billion yuan in new loans a year earlier.

Despite the expected drop in October, analysts expect China’s central bank to maintain policy support for the economy, pointing to solid broader credit growth.

Liu Guoqiang, a vice governor of the People’s Bank of China (PBOC), said on Friday the central bank would consider policy changes as the economy recovers, but would not act hastily, with any shifts based on accurate economic assessments.

The PBOC has taken easing measures since early February, including bank reserve requirement cuts and targeted lending support for virus-hit firms.

Broad M2 money supply growth in October was seen at 10.9%, steady with the previous month.

Annual outstanding yuan loans were expected to grow by 13.0% for October, the same as for September.

Beijing has been relying more on fiscal stimulus to weather the downturn, cutting taxes and issuing local government bonds to fund infrastructure projects.

Local governments issued a net 3.5466 trillion yuan ($528.25 billion) in special bonds by the end of October, completing 94.6% of the annual target, the finance ministry said last week.

Any acceleration in government bond issuance could help boost total social financing (TSF), a broad measure of credit and liquidity.

In October, TSF is expected to fall to 1.4 trillion yuan from 3.48 trillion yuan in September.

China’s policymakers are close to setting an average annual economic growth target of around 5% for the next five years, at the lower end of ranges previously considered as global risks cloud the outlook, policy sources said.
Source: Reuters (Reporting by Judy Hua and Kevin Yao; editing by Barbara Lewis)

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