China New Loans
CEIC Gallery/Hot Topics/China Premium Database (Also applied: WorldTrend Database, Global Database) - February 22, 2016 Summary China’s total new loans reached record-high in Jan 2016, which implied higher financing demand and probably more investment projects from non-financial enterprise and government agencies/organizations during Jan 2016. Nevertheless, with no obvious growth in investment profits and uncertainties in China's economy, the sustainability of the growth in new loans remains a question. The charts below show the breakdown of new increased loans as well as the related economic factors. Chart 1 - 2
- China’s total new loans increased 70.7% y-o-y to RMB 2,510 billion in Jan 2016.
- Chart 3 & 4 show the breakdowns of new loans by loan type and type of borrower respectively.
- In terms of loan type, medium and long term account for 61.3% in Jan 2016 while short term & billing financing account for 38.0%, compared to 106.9% and 36.6% in Dec 2015, respectively.
- In terms of type of borrower, non-financial enterprise and government agency & organization accounts for 77.3% in Jan 2016 while household account for 24.2%, compared to 85.4% and 53.3% in Dec 2015, respectively.
- Chart 5 to 7 show the amount of new loan made by household, non-financial enterprise and government agency & organization, and non-bank financial institution respectively.
- New loan made by household increased 42.6% y-o-y to RMB 607.5 billion in Jan 2016, in which long term loan and short term loan accounts for 78.7% and 21.2% respectively.
- New loan made by non-financial enterprise and government agency & organization increased 84.8% y-o-y to RMB 1,940 billion in Jan 2016, with 23.3% short term loan, 54.6% medium and long term loan, and 19.2% for bill financing.
- On the other hand, outstanding loan from non-bank financial institution dropped RMB 40.6 billion in Jan 2016, compared to the decline of RMB 14.4 billion in Jan 2015
- The above figures suggest that the increase in Jan was mainly from the non-financial enterprise and government agency & organization.
- Chart 8 to 13 demonstrate the economic factors that influence financing demand.
- With no doubt, investment sentiment plays an important role. Chart 8 and chart 9 below show Fixed Asset Investment (FAI), Producer Price Index (PPI) and industrial profit growth in China respectively.
- Real estate is one of the major factors of the household financing demand. Real Estate Climate Index and total profit of real estate enterprises in Chart 10 are good references.
- China's economic growth is highly affected by its construction investment growth. Construction investment is also one of the government's tactics to boost the country's economy. Chart 11 provides the indicators for accessing the construction investment sentiment, which is the major contributor to the financing demand from non-financial enterprises and government agencies & organizations.
- Chart 12 shows China's foreign exchange reserves, which indicates the demand for RMB. Higher foreign exchange reserves implies higher RMB demand and vice versa.
- Chart 13 shows China's GDP Growth for accessing the country's overall economic environment.
- Table 1 below shows the distribution of outstanding loans in China by industry.
- Table 2 shows the amount of outstanding loans of the corresponding industry in China.