China credit growth slows more than projected

China's credit expansion slowed more than expected in October, as borrowing demand dwindled in a traditionally slow month for financing activity.

Aggregate financing, a broad measure of credit, increased 1.4 trillion yuan (HK$1.5 trillion), according to Bloomberg calculations based on data released by the People's Bank of China yesterday. That compares with a median forecast of 1.5 trillion yuan by economists in a Bloomberg survey, and an increase of 1.8 trillion yuan in the same month a year ago.

Financial institutions offered 500 billion yuan of new loans in the month, Bloomberg calculations showed. The median forecast was 700 billion yuan.

China's slowing economic activity showed initial signs of stabilization in October, following a broad package of stimulus introduced from the end of September that included a slew of interest-rate cuts. October is usually a weak month for credit growth because banks are not in a rush to hit their quarterly lending targets.

Corporate and household borrowing demand has been sluggish in recent years, as the worst property downturn in recent history dampened consumption and investment in many related sectors. As a result, China has not experienced the typical credit cycles seen before 2022, but rather saw a continued slowdown in lending.

The M1 narrow money supply - which includes cash in circulation and corporate demand deposits - fell 6.1 percent in October, slightly less than forecast by economists. Companies have been using deposits to pay back loans while consumers stayed cautious about spending.

BLOOMBERG