According to the People's Bank of China, new bank lending in July fell more than expected, while the growth of total outstanding loans slowed down. The reasons behind this are worries over fresh COVID-19 outbreaks, the weakening labor market, and a deepening property crisis. The data released by the PBoC showed that Chinese banks issued 679 billion yuan ($101 billion) in new loans in July, thus failing to meet the forecast. Analysts polled by Reuters predicted that new loans in China would fall to 1.10 trillion yuan in July versus 2.81 trillion in the previous month. Notably, in July last year, the total amount of borrowed funds stood at 1.08 trillion yuan. According to the central bank of China, household loans, including mortgages, fell to 121.7 billion yuan in July from 848.2 billion in June. What is more, loans to businesses decreased to 287.7 billion yuan from 2.21 trillion. At the moment, there is a risk that a growing number of home buyers in China will stop repaying mortgages on stalled projects. Against this backdrop, Chinese regulators urge banks to provide funds to developers. However, these measures seem not enough to restore confidence in the Chinese property sector. Earlier, the People's Bank of China confirmed its plan to enhance its monetary policy and maintain high liquidity volumes. At the same time, the regulator is closely monitoring inflation changes at home and abroad. Experts note that a recent liquidity surplus observed in the interbank market is a sign of weak demand for loans. The survey conducted by China Beige Book International revealed that demand for credit from manufacturing and services companies dropped in July, while in the retail sector, lending increased slightly compared to the previous month. In July, outstanding loans went up to 11% compared to the 11.2% growth recorded in June. Meanwhile, the outstanding total social financing (TSF), which measures credit and liquidity in the Chinese economy, slowed to 10.7%.
