China's banks extended more new loans than expected in November after a sharp drop the previous month, in a sign that recent government pressure on lenders to help struggling smaller firms may be starting to bear fruit. But several other key credit gauges remained stuck at record lows or fell to new lows, suggesting China's policymakers will need to step up support efforts soon to stabilise the slowing economy.
"Generally speaking, the situation is not satisfactory, and monetary policy should maintain the current tone," said Wang Yang, an economist at the Development Research Center, a government think tank. "It may take time to see results from supporting measures for private firms and we should step up infrastructure investment in the short term."
Chinese banks extended 1.25 trillion yuan ($182 billion) in net new yuan loans in November, slightly more than analysts had expected and up from the previous month, according to data published by the People's Bank of China on Tuesday.
Analysts polled by Reuters had predicted new yuan loans of 1.1 trillion yuan last month, up from 697 billion yuan in October and roughly in line with November last year.
October's weak readings had largely been attributed to seasonal factors, with November loans seen snapping back for the same reasons.
But China's stubbornly weak credit growth has fueled speculation that authorities will have to take more aggressive policy action in coming months - such as a benchmark rate cut - to reduce the risk of a sharper economic slowdown in 2019.
Total social financing (TSF), a broad measure of liquidity and credit in the economy, jumped to 1.52 trillion yuan in November from 728.8 billion yuan in October, also beating expectations.
But growth of outstanding TSF slowed to a new all-time low of 9.9 percent from 10.2 percent in October, as regulators continued to crack down on riskier types of financing despite indications that it is weighing on broader business activity.
TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.
A jump in bank loans this year has barely compensated for a slide in shadow loans.
New bank loans in the first 11 months of 2018 totalled 15.09 trillion yuan, up 16.6 percent from a year earlier and eclipsing last year's full-year record of 13.53 trillion yuan.
But combined trust loans, entrusted loans and undiscounted bankers' acceptances, which are common forms of shadow banking finance, fell by 190.4 billion yuan in November, following a slide of 2.57 trillion yuan in the first 10 months.
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