BEIJING : China's new bank loans tumbled in July from a month earlier and other key credit gauges also weakened, even after policymakers cut interest rates and promised to roll out more support for the faltering economy.
"China’s bank loan growth fell to its lowest in seven months in July, while broad credit growth dropped to a record low," Capital Economics said in a note to clients. Household loans, mostly mortgages, contracted by 200.7 billion yuan, in July, compared with 963.9 billion yuan in June, as a debt crisis in the property sector deepened, while corporate loans slid to 237.8 billion yuan last month from 2.28 trillion yuan in June, central bank data showed.
The central bank in June cut its benchmark lending rates by a modest 10 basis points, the first such reduction in 10 months. A number of analysts predict further small cuts this year, but say that may do little to turnaround the economic malaise quickly as long as consumers and companies remain so cautious about new borrowing.
More fiscal stimulus is also expected, with local governments - many of which are already heavily indebted - being told to speed up bond issuance to fund infrastructure projects.
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