Call Volume Up 12.4% Year-on-Year
Yuan Loans Plunge, Falling Short of Forecasts
Household deposits in China sharply declined last month, raising expectations for a consumption recovery. There are also forecasts that the liquidity accumulated during the COVID-19 spread period will be released to drive the economy. However, at the same time, yuan loans to households and businesses also showed a downward trend, leading to analyses that demand remains sluggish.
According to the latest data released on the 11th by the People's Bank of China, the central bank, yuan deposits decreased by 460.9 billion yuan (approximately 88.13 trillion KRW) last month. Among them, household deposits alone fell by 1.2 trillion yuan, and non-financial corporate deposits decreased by 140.8 billion yuan. Meanwhile, fiscal deposits (502.8 billion yuan) and non-bank financial institution deposits (291.2 billion yuan) recorded increases. As of the end of April, the money supply (M2) stood at 28.085 trillion yuan, up 12.4% year-on-year.
So far, the market has paid great attention to China's liquidity, including excess savings. During the more than three years of COVID-19 spread, Chinese people focused on saving rather than consumption due to concerns about economic uncertainty. Zhongxin Securities estimated that the cumulative excess savings of Chinese people since 2019 reached 10.8 trillion yuan. There were even concerns that if China's savings were released into the market in a short period, it could fuel global inflation.
Some view last month's decline in China's deposits as a signal of consumption recovery. Zhongxin Securities analyzed, "The decrease in deposits is mainly due to the recovery of risk appetite, improvement in consumer sentiment, and interest rate declines." China Securities Journal also evaluated that deposits might have shifted not directly to consumption but to non-bank deposits or investment products.
On the other hand, there is also analysis that recent liquidity flows are not positive for economic recovery. The amount of new yuan loans in China for April, announced on the same day, was 718.8 billion yuan, which is not only a sharp drop from the previous month (3.89 trillion yuan) but also about half of the market experts' forecast (1.4 trillion yuan).
Household loans, mainly consisting of mortgage loans, decreased from 1.24 trillion yuan in March to 241.1 billion yuan in April, and corporate loans plunged from 2.7 trillion yuan in March to 683.9 billion yuan last month. Capital Economics stated in a client letter, "Credit demand is wavering," suggesting "there should not be high hopes for domestic demand in China this year." Zhou Hao, chief economist at Guotai Junan, diagnosed, "China's credit data is much lower than expected, raising concerns about the sustainability of economic recovery after the with-COVID policy."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
