Chinese households avoid borrowing
Is China’s great reopening stuttering? Bank lending gives cause for concern: domestic credit growth has been weaker than expected, and there’s an interesting bifurcation in the data.
As our chart shows, on a twelve-month cumulated basis, new lending is growing year-on-year. But demand is solely driven by non-financial enterprises.
Since January 2022, new household loans have been shrinking, as seen by the swath of orange-coloured bars in negative territory – something rarely seen in the previous few years.
This is the context for this month’s rate cuts by the central bank, which is keen to boost the recovery.