Reuters Poll Predicts Decrease in China's Record-High February Bank Loans

China's new yuan loans are forecasted to have significantly decreased in February compared to a record high in January, as per a Reuters survey released on Friday. Chinese banks are projected to have issued 1.275 trillion yuan ($176.03 billion) in net new yuan loans last month, a substantial drop from January's 5.13 trillion yuan, attributed to the typical front-loading of loans at the beginning of the year by Chinese lenders. Analysts suggest that corporate credit demand may still be sluggish, with Citi analysts noting, "Underlying credit demand—especially for corporates, could be yet to recover." The property sector may provide some uplift to household loans. China's economic challenges persist, such as a prolonged property crisis, deflationary pressures, and local government debt concerns. The economy continues to rely heavily on exports and manufacturing, causing imbalance as domestic consumption lags. Premier Li Qiang signalled further fiscal stimulus and support for consumption at the annual parliament session, emphasizing a commitment to meeting growth targets. The central bank vows to cut interest rates and boost liquidity as needed. The recent tariff escalation between the U.S. and China poses additional challenges. China retaliated against U.S. tariffs on Chinese imports by increasing levies on American agricultural products, heightening trade tensions. Growth in broad M2 money supply remained steady at 7.0% in February. Outstanding yuan loans are predicted to rise 7.4% from a year earlier, slightly slower than January's pace. Government bond issuance in February is estimated at 1.5 trillion yuan, providing support to total social financing (TSF). TSF growth was 8% in January, remaining unchanged from December. Expected TSF in February is 2.5 trillion yuan, significantly lower than January's 7.06 trillion yuan.