China's bank lending saw a smaller-than-anticipated increase in May, reflecting persistent weak credit demand amidst the ongoing property market crisis, according to official data released on Friday. New yuan loans rose to CNY 950 billion in May from CNY 730 billion in April, falling significantly short of the expected CNY 2.25 trillion.
From January to May, yuan-denominated loans surged by CNY 11.14 trillion, as reported by the People's Bank of China.
By the end of May, M2, a broad gauge of money supply, recorded an annual growth of 7.0 percent, whereas the narrower measure, M1, declined by 4.2 percent.
Analysts at Capital Economics anticipate continued robust government bond issuance in the near term. While the PBoC is unlikely to reduce policy rates next week, it is expected to maintain loose monetary conditions.
Collectively, these elements are likely to facilitate a moderate increase in credit growth in the imminent future.
"However, without a turnaround in the property sector, this uptick will likely be short-lived," they remarked. They also noted that early indications suggest the current property rescue package is having limited impact.
