Chinese Credit Growth Slows More Than Expected in April

(Bloomberg) -- China’s credit growth slowed more than expected in April after record expansion in the first quarter, underlining the fragile nature of the recovery in the economy.

• Aggregate financing was 1.36 trillion yuan ($200 billion) last month, compared to almost 2.9 trillion in March, the People’s Bank of China said on Thursday. The median estimate was 1.65 trillion yuan in a Bloomberg survey.

Key Insights

• Financial institutions offered 1.02 trillion yuan of new loans in the month, versus a projected 1.2 trillion yuan
• Broad M2 money supply increased 8.5 percent as forecast, down slightly from March
• “Beijing’s policy focus is sticking to stabilization, rather than chasing a rebound,” said Zhuang Bo, chief China economist in Beijing at research firm TS Lombard. “Some parts of the economy are recovering and there is evidence of green shoots. Obviously, if the trade negotiation goes south with tariff hikes this week, China’s economic policy priority will shift back to easing and stimulus.”

What Bloomberg’s Economists Say

“Policy should remain supportive on both the broad based and targeted fronts. In the event of additional U.S. tariffs coming into force, there will be a need for broad-based measures to return to the fore.”
Chang Shu and David Qu, Bloomberg Economics in Hong Kong
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• Shadow banking began to shrink again after expanding in March, dropping 142.7 billion yuan
  • Entrusted loans, organized by a bank between borrowers and lenders, fell 119.9 billion yuan
  • Trust loans, made by trust companies to finance infrastructure and real estate, rose by 12.9 billion yuan
  • Bankers’ acceptance, short-term credit issued by a company with a bank’s guarantee, dropped 35.7 billion yuan

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