China's new yuan loans are set to experience a significant increase in September 2024, buoyed by the central bank's efforts to boost the economy and meet growth targets, according to a Reuters poll released on Wednesday. Banks are estimated to have issued 1.87 trillion yuan in net new yuan loans last month, up from 900 billion yuan issued in August but below the 2.31 trillion yuan issued in September 2023. The People's Bank of China (PBC) unveiled a series of aggressive monetary stimulus measures, including the most extensive package since the COVID-19 pandemic. These measures, coupled with property market support such as mortgage rate cuts, aim to revitalise the flagging economy. In addition to monetary stimulus, Chinese leaders have pledged to deploy "necessary fiscal spending" to meet the country's growth target of around 5 per cent for 2024. However, the recent statement from the head of China's state planner, while expressing confidence in achieving the target, did not announce any additional fiscal measures, disappointing investors. The poll also indicates that outstanding yuan loans are likely to rose to 8.3 per cent in September from a year earlier, down slightly from 8.5 per cent in August. This suggests that weak household and corporate confidence may be hindering credit demand despite lower interest rates. Broad M2 money supply growth is expected to have increased slightly to 6.4per cent in September from 6.3 per cent in August. An acceleration in government bond issuance could further boost growth in total social financing (TSF), a broader measure of credit and liquidity. The Chinese government is set to provide more details on its fiscal stimulus plans at a news conference on Saturday. This announcement is expected to shed light on the additional measures that will be implemented to support economic growth. Local governments have already issued 2.83 trillion yuan in special bonds, reaching 90 per cent of the total planned for project construction this year. Additionally, the central government has issued one trillion yuan of ultra-long-term special bonds to fund major projects. Attribution: Reuters Subediting: Y.Yasser
