China: Credit demand and liquidity trends – DBS

DBS Group Research anticipates China’s credit demand to stay weak in July, with new Yuan loans around RMB 10.8 billion and M2 growth at 8% year-on-year. Corporate and household medium- to long-term lending are likely to soften amid cautious borrowing and mortgage prepayments. Elevated precautionary savings and subdued property prices are expected to constrain investment and consumption.

Weak lending and elevated savings

"Credit demand remains weak, with new yuan loan is expected to stay at RMB10.8bn in July."

"Both corporate and household medium- to long-term lending likely softened amid cautious borrowing sentiment and continued mortgage prepayments."

"M2 growth is expected to remain at 8.0% yoy."

"Precautionary savings stayed elevated, while weak property prices continued to weigh on household wealth."

"The wide gap between M2 and M1 growth is expected to persist, reflecting subdued corporate investment and household consumption."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)