Loan growth was very slow

Using data from aggregate finance, yuan loans drawn in China rose just CNY 720.2 billion in February, smaller than the CNY 764.1 billion seen in the same month last year. Even combining the first two months, loan growth was just CNY 4.21 trillion, CNY 118.3 billion lower than the same period of 2019. This looks strange as China needs more credit to buffer the economy amid the Covid-19 outbreak.

While aggregate finance growth was a mere CNY 855.4 billion in February, it does look bigger when we combine the first two months, coming in at CNY 5.92 trillion. 

The main difference between growth in loans and aggregate finance is the high growth of government bond issuance (including sovereign, quasi-sovereign, local governments, and local government special bonds), which seemed to be front-loaded in January. Government bond issuance grew by CNY 943.7 billion, an increase of CNY 339.1 billion from the same period a year ago.

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