China’s new loans in the first two months lower than expected, weak financing demand.

According to the latest update from the People’s Bank of China in February, the new loans in China were lower than expected, signaling a weak demand for financing in the real economy.

The People’s Bank of China revealed on the 14th that the new loans in the first two months of this year totaled 6.14 trillion yuan. By the end of February, the outstanding loans amounted to 261.78 trillion yuan, a year-on-year increase of 7.3%. Breaking it down, household loans increased by 54.7 billion yuan in the first two months, while loans to enterprises and other entities rose by 5.82 trillion yuan, with medium and long-term loans witnessing a 4 trillion yuan increase.

Based on the data released by the People’s Bank of China, Reuters calculated that new loans in China for February were 1.01 trillion yuan, significantly lower than what analysts had predicted.

Analyzing the situation, Hong Kong’s Economic Daily pointed out that if we exclude the impact of the Chinese New Year on loan data, the new loans in the first two months amounted to 6.14 trillion yuan, approximately 230 billion yuan less than the same period last year.

Further analysis from the Economic Daily revealed that the momentum for residential loans in China is weak. Residential loans increased by 54.7 billion yuan in the first two months, showing a decrease of around 334.7 billion yuan compared to the previous year. Short-term loans decreased by 323.8 billion yuan annually, while long-term loans, especially personal housing loans, increased by 378.5 billion yuan, a rise of 144.9 billion yuan.

Wen Bin, Chief Economist at Minsheng Bank, pointed out that in terms of short-term loans for residents, although both commodity and service consumption in February performed relatively well, the Lunar New Year’s disruptions continued to impact the willingness for short-term financing. Additionally, with no substantial improvements seen in long-term variables such as residents’ employment and income, the recovery of consumer demand remains sluggish. The field of personal business loans is also under pressure from risk disturbances.