China’s new yuan-denominated lending jumped to 2.51 trillion yuan (385 billion US dollars) in January, up 71 percent from a year earlier and well above market forecasts, official data showed on Tuesday.
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Economists polled by Reuters had expected new yuan loans to surge to a near seven-year high of 1.8 trillion yuan in January, tripling from 597.8 billion yuan in December.
Total social financing, a broader measurement of credit in the economy, came to 3.42 trillion yuan in January, up sharply from the 1.82 trillion yuan in December.
The monthly foreign trade surplus widened 12.2 percent year on year to 406.2 billion yuan (62.38 billion USA dollars) in January, up from 382 billion yuan a month earlier, according to the General Administration of Customs (GAC).
However, despite the upbeat performance in Asia, the 11.20% fall in China’s January exports and 18.80% drop in January imports continue to outweigh.
The disappointing trade figures sparked some investors to raise more questions about the future of the yuan.
The People’s Bank of China set the midpoint rate CNY=SAEC at 6.5237 per dollar prior to the market open, 0.16 percent weaker than the previous fix of 6.513. The central bank on Monday fixed the currency at its highest level against the dollar in more than a month, and in Shanghai trading it rose 0.9 percent Monday morning, its biggest rise in more than ten years.
“The weak trade numbers indicate that the recovery in December’s trade figures was largely due to a front-loading effect, rather than improving demand”, said Hao Zhou, senior economist at Commerzbank in Singapore.
In response, the central bank has bought up off-shore yuan and tightened yuan supply in the offshore markets, despite concern that the moves may go against the goal of truly internationalizing the yuan.
He believes China’s banking system will suffer a loss four times greater than that suffered by United States banks during the great recession.
The PBoC injected about CNY 1.5 trillion in liquidity through standing lending facility, medium-term lending facility and pledged supplementary lending ahead of Lunar New Year holiday in January to avoid liquidity strain.
“This shows that if China wants to deliver a 6.5 to seven per cent growth target this year they have to rely on domestic demand”, said Larry Hu, head of China Economics at Macquarie Securities in Hong Kong.
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Worries over global economic weakness and a continued slump in oil prices hurt demand for emerging market assets last week while Chinese markets were closed for the Lunar New Year holiday.
