Chinese banks are still not lending much in the first 20 days of May23 May, 2012, 11:03. Posted by Zarathustra
A week or so ago, we learned that the big 4 Chinese banks (ICBC, Bank of China, China Construction Bank and Agricultural Bank of China) have virtually lend nothing for the first two weeks of May.
Now, we learn that the big four banks are still virtually lending nothing in the first 20 days. Well just RMB34 billion actually, to be precise, compared with over a trillion in March for the total banking system, according to 21cbn.com. At the same time, the big 4 banks are still losing RMB270 billion of deposits in the first 20 days
However, it also noted that apparently the NDRC has increased the approval process of projects. On 21 May alone, there are 100 projects being approved, which is even more than the count for the first 20 days of the month. Perhaps this is because of the latest push to support growth and to bring forward infrastructure investment projects.
But that aside, demand for credit remains very weak according to various banks, and short-term loans and bills remain the main sources of new loans as opposed to long-term loans, as we have seen in the past few months’ composition of new loans. Just as expected, with the economy slowing, the demand for credit will be weak, and the overall picture is still consistent with the rather sinister speculation of debt deflation.
It is yet to see if the government will be able to force banks into lending in the coming months to support all these infrastructure projects to support growth, simply for the sake of manufacturing GDP growth.