As we discussed in Commodore Research's Weekly China Report, and worthy of much more attention in the media and from major research providers, is that Chinese banks issued a record 5.13 trillion yuan in new loans in January. This has marked a month-on-month increase of 4.14 trillion yuan (418%) and is up year-on-year by 210 billion yuan (4%). While it is normal for lending to set a record every January, the year-on-year growth is particularly noteworthy. In January 2024, new loans grew year-on-year by only 0.4%.
January’s 4% year-on-year growth is also particularly significant considering that during all of 2024, China's new loans contracted year-on-year by 20%. That contraction marked an unfortunate shift as in 2023, China's new loans had increased year-on-year by 7%. Overall, it is a positive development that growth in China's new lending has so far returned. Outstanding loan growth has fallen to 7.5%, which again marks China’s lowest outstanding loan growth seen since tracking began in 1998 — but if new loans are able to continue to maintain their newfound growth, then outstanding loan growth will finally recover as well.
