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China’s Sept new yuan loans seen rising from previous month

China’s new yuan loans are expected to rise in September from August, a Reuters poll showed, as the central bank seeks to underpin an economic recovery.

Chinese banks are estimated to have issued 1.85 trillion yuan ($286.89 billion) in net new yuan loans last month, up from 1.22 trillion yuan in August, according to the median estimate in the survey of 19 economists.

That would be lower than 1.9 trillion yuan issued the same month a year earlier.

China will stay with normal monetary policy for as long as possible and its potential economic growth rate is still expected to remain in the range of 5%-6%, Yi Gang, the governor of the central bank, the People’s Bank of China (PBOC), wrote in an article in late September.

Central bank vice governor Pan Gongsheng said last month China would maintain prudent monetary policy and not resort to flood-like stimulus.

In July, the PBOC cut the reserve requirement ratio (RRR) for banks, releasing about 1 trillion yuan in long-term liquidity. Analysts expect another RRR cut this year.

Annual outstanding yuan loans were expected to grow by 12.1% for September, the same as in August, the poll showed. Broad M2 money supply growth in September was seen at 8.1%, down from 8.2% the previous month.

China’s local governments issued a net 1.843 trillion yuan in special bonds in the first eight months of 2021, finance ministry data has shown.

Local governments are expected to quicken special bond issuance in the second half of this year to bolster investment and support growth.

The government will strive for early issuance of 2022 special local government bonds.

Any acceleration in government bond issuance could help boost total social financing (TSF), a broad measure of credit and liquidity. Outstanding TSF growth slowed to 10.3% in August from a year earlier, the lowest since December 2018, and from 10.7% in July.

In September, TSF is expected to rise to 3.105 trillion yuan from 2.96 trillion yuan in August.
Source: Reuters (Reporting by Judy Hua and Kevin Yao)

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