Sources said that the People's Bank of China has sent recommendations to large state lenders and regional banks, urging them to increase lending to support economic growth. One of the sources noted that in the first half of January, bank lending was lower than in the same period last year.
In general, the leadership of the Central Bank of China indicated that it is urgent to stabilize the Chinese economy, which slowed down sharply in 2021 due to problems in the real estate sector, reduced investment and reduced consumer spending due to the coronavirus.
However, experts note that there is a risk that demand for loans will remain weak, despite the efforts of politicians to increase lending. Data released last month showed that in the 4th quarter, Chinese companies reduced investments, and the cost of financing small businesses increased sharply. Although the volume of new loans in yuan reached a record high of 19.95 trillion yuan in 2021, data indicate that long-term corporate lending has been declining in recent months.
In December, regulators recommended the country's banks increase lending to real estate in the first quarter, while the government also eased a key debt restriction for developers, indicating that they are increasingly concerned about the liquidity crisis in the industry.
Meanwhile, in December, the growth rate of medium- and long-term loans to households slowed to the lowest level since February 2020, which is also a cause of concern for policymakers.