Pressure on Chinese officials to boost stimulus has ratcheted up after credit growth last month tumbled to the second-lowest amount this year amid weak demand and seasonal factors.
Aggregate financing was 1.01 trillion yuan (US$143 billion) last month, compared with about 2.26 trillion yuan in June, the People’s Bank of China said late on Monday.
The median estimate of economists was 1.63 trillion yuan.
Unlike global peers, Chinese policymakers have shown little sign that they are contemplating more aggressive monetary stimulus as they remain focused on keeping a lid on debt and financial stability risks.
As the trade war with the US dents confidence at home and abroad, economists say there is now an increasing need to loosen policy.
“The key constraint has become credit demand,” said Larry Hu (胡偉俊), head of China economics at Macquarie Securities Ltd in Hong Kong. “In the coming months, credit growth would remain constrained by the lack of credit demand until stimulus has to go to Level-3, under which policymakers would artificially create credit demand through loosening shadow banking and property.”
The drop was at least partly due to seasonal patterns, with last month’s credit growth usually slower than that in June. The only month this year with a lower total was February, when Lunar New Year holiday falls.
New yuan loans to the real economy were 808.6 billion yuan last month, down by 477.5 billion yuan from a year earlier, according to the central bank.
“It reflects weak loan demand and tight credit conditions after the credit events in the regional banks,” said Michelle Lam, greater China economist at Societe Generale SA in Hong Kong. “With such a weak set of credit data there is now more pressure on policymakers to deliver more easing.”
Lam said a step-up in property tightening also likely weighed on lending.
Financial institutions offered 1.06 trillion yuan of new loans in the month, versus a projected 1.28 trillion yuan, while banks’ new yuan loans to non-financial enterprises was the lowest since October.
Broad M2 money supply grew 8.1 percent from a year earlier, slower than in June.
Hu said policymakers are pressuring banks to lend, but the banks are finding it hard to do so due to a lack of credit demand and concern over bad loans.
As a result, banks are dishing out short-term lending to fulfill quotas while minimizing credit risks, but such lending “is neither significant nor sustainable,” Hu said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to