A Chinese convenience store vendor shows her earnings in 100 Chinese Yuan.
Image: File.
New bank loans in China rebounded more than expected in March, recovering from a sharp drop the previous month, as policymakers pledge to ramp up stimulus to buttress the world's second-largest economy against an escalating trade war with the US.
Chinese banks extended 3.64 trillion yuan (RR9.25 trillion.) in new yuan loans in March, according to Reuters calculations based on data released by the People's Bank of China (PBOC) on Sunday.
Analysts polled by Reuters had predicted new yuan loans would rise to 3 trillion yuan last month, compared with a lower-than-expected 1.01 trillion yuan in February and 3.09 trillion yuan in the same month last year.
For the first quarter, total new loans rose to 9.78 trillion yuan from 9.46 trillion yuan in the same period last year.
"The financial data of March and the first quarter are both significantly better than expected," said Dong Ximiao, the chief researcher at Merchants Union Consumer Finance.
Zhou Hao, the chief economist at Guotai Junan International, said the stronger than expected lending data could boost confidence in the economy and delay an expected cut in banks' reserve requirement ratio (RRR).
Fiscal policy stimulus aimed at boosting domestic demand could still be the key to counter the impact from the escalating trade war, Zhou said.
Household loans, including mortgages, rose 985.3 billion yuan in March, compared with a contraction of 389.1 billion yuan in February, according to Reuters calculations based on central bank data. Corporate loans jumped to 2.84 trillion yuan from 1.04 trillion yuan.
China is contending with deepening trade frictions sparked by U.S. President Donald Trump's sweeping tariffs on trading partners.
Beijing has showed no sign of backing down, complicating any prospects of a near-term resolution and raising the stakes for a prolonged standoff that could further weigh on exports - one of the few bright spots in China's uneven economy.
The tariffs will put immense pressure on China's exporters and its broader manufacturing sector, particularly when domestic demand remains sluggish and deflationary pressures persist. Consumer and business confidence were already shaky before Trump's re-election in November.
Some analysts, including Zhou Shilei, director of the global financial market department at UOB (China), expect an imminent cut to the RRR.
But Zhou Shilei said the urgency of a rate cut in open market operations is, meanwhile, diminishing after the U. excluded from steep tariffs some electronics imported largely from China.
REUTERS