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Staff of Reuters 3 Minutes to Read BEIJING, China (Reuters) – As the central bank works to shore up faltering growth in the world’s second largest economy, China’s new bank loans increased more than predicted in June, while broad credit growth also increased significantly. PHOTO FROM THE FILE: On March 30, 2016, a clerk counts Chinese 100 yuan banknotes in a counting machine at a commercial bank branch in Beijing, China. Kim Kyung-Hoon/Reuters According to figures released by the People’s Bank of China on Friday, Chinese banks extended 2.12 trillion yuan ($327 billion) in new yuan loans in June, up from 1.5 trillion yuan the previous month. New yuan loans were expected to reach 1.8 trillion yuan in June, according to analysts polled by Reuters. The Chinese economy has essentially recovered to pre-pandemic levels of growth, thanks to a remarkably resilient export sector. Smaller businesses, on the other hand, are facing the brunt of the recent spike in raw material prices, as they struggle to pass on higher costs to customers. To aid small businesses in dealing with mounting prices, the PBOC announced a new reduction in the amount of cash that banks must retain as reserves on Friday, the first such move since April last year, when the economy was still reeling from the coronavirus crisis. Household loans increased to 868.5 billion yuan in June, up from 623.2 billion in May, while business loans increased to 1.46 trillion yuan, up from 805.7 billion in May. Total social finance (TSF), a broad indicator of credit and liquidity in the economy, increased to 3.67 trillion yuan in June from 1.92 trillion yuan in May, exceeding experts’ expectations of 2.87 trillion yuan. TSF refers to off-balance-sheet financing that occurs outside of the traditional banking system, such as initial public offerings, trust company loans, and bond sales. The outstanding TSF increased 11% year on year to 301.56 trillion yuan ($46.49 trillion) at the end of June. The broad M2 money supply increased 8.6% from a year ago, above the Reuters poll’s prediction of 8.2% growth. M2 increased by 8.3 percent in May compared to the same month last year. Outstanding yuan loans increased by 12.3 percent from a year ago, up from 12.2 percent in May. Analysts had predicted a growth rate of 12.1%. ($1 = 6.4855 Chinese yuan renminbi renminbi renminbi renminbi renminbi renminbi Stella Qiu, Judy Hua, and Kevin Yao contributed reporting, while Gareth Jones edited the piece./nRead More

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