According to a Reuters poll on Friday, it is anticipated that China's new yuan loans increased significantly in January compared to December but are expected to remain below the previous year's high. Chinese banks are estimated to have issued 4.5 trillion yuan ($617.75 billion) in net new yuan loans last month, a substantial rise from 990 billion yuan in December. However, this new lending is projected to fall short of the record 4.92 trillion yuan issued in January 2024.
An analyst at Citi highlighted factors like a decrease in working days, subdued risk appetite, and credit demand as reasons that could impede loan extensions. The recent contraction in China's manufacturing activity, as per an official factory report, underscores the need for stimulus in the economy. China's bank lending in 2024 was 18.09 trillion yuan, lower than the record set in 2023, attributed to various economic challenges.
Chinese President Xi Jinping mentioned addressing "external shocks" in 2025 to support the economic rebound. Expectations include further adjustments in key lending rates and bank reserve ratios, with ongoing pressure on the yuan's value. Furthermore, analysts believe government bond issuance may assist in boosting total social financing (TSF) growth. TSF at the end of December rose to 8.0% after reaching a low in October and November. In January, TSF is likely to increase to 6.4 trillion yuan from 2.86 trillion yuan in December.