By Ethan Wang and Kevin Yao
BEIJING (Reuters) – China’s new yuan loans likely rebounded in March after a sharp fall in February, a Reuters poll showed on Wednesday, as policymakers pledged fresh stimulus to counter mounting economic headwinds amid a worsening global trade war.
Banks are estimated to have issued 3 trillion yuan ($408.19 billion) in net new yuan loans last month, up from 1.01 trillion yuan in February, according to the median estimates of 11 economists.
The new lending forecast would be lower than the 3.09 trillion yuan issued in new loans in March 2024.
“Overall credit demand may have stayed soft as the bills discount rate stayed subdued throughout the month,” Citi analysts said in a note.
“Meanwhile, household borrowing may have stayed low despite the easing of quota of consumer loans.”
New bank lending in China plunged more than expected in February after hitting a record high in January. Total lending would reach 9.14 trillion yuan in the first quarter if the March reading matches forecasts, compared with 9.46 trillion yuan in the same period last year.
China has set an ambitious 2025 growth target of “around 5%”, though analysts believe it may be increasingly difficult to achieve amid escalating U.S.-China trade tensions.
President Donald Trump has hiked tariffs on Chinese goods this year to 104%, after China retaliated by matching his “reciprocal” duties.
Citi this week downgraded its China GDP forecast to 4.2% from 4.7% for 2025, warning that higher U.S. tariffs could drag China’s growth by at least 1.5 percentage points on an annualised basis.
In a sign authorities may step up stimulus to shield the economy from external shocks, the state-run People’s Daily said in a commentary last Sunday that China has “ample room” for monetary easing, including reserve requirement ratio cuts and interest rate reductions.
The paper also flagged the potential for further expansion of fiscal deficits, special bonds and special treasury bonds.
Separately, four of China’s largest state-owned banks last week unveiled around $72 billion in recapitalisation plans, following through Beijing’s pledge to help the lenders increase capital buffers and manage asset quality strains.
Outstanding yuan loans were expected to rise 7.3% in March from a year earlier, the poll showed, unchanged from the pace in February.
Broad M2 money supply growth last month was seen at 7.1%, quickening from 7.0% in February.
Total social financing (TSF), a broad measure of credit and liquidity in the economy, likely grew to 4.8 trillion yuan in March from 2.23 trillion yuan in the previous month.
Outstanding TSF rose 8.2% in February, up from 8.0% in January and December.
($1 = 7.3495 Chinese yuan)
(Reporting by Ethan Wang and Kevin Yao; Polling by Jing Wang from Shanghai and Pranoy Krishna, Susobhan Sarkar and Veronica Khongwir from Bengaluru; Editing by Sam Holmes)
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