Chinese bank lending fell more than 40 percent month-on-month in February largely on seasonal fluctuations, official data showed Thursday, beating expectations amid concerns that a flood of credit is increasing risks in the world's second-largest economy. New loans extended by banks fell to 1.17 trillion yuan ($170 billion), the People's Bank of China said Thursday, a sharp drop from January's surge of 2.03 trillion.
But the figure beat median expectations of 950 billion yuan in a Bloomberg News poll, showing that firms' demand for credit stayed high. New loans usually surge in January, when banks are issued fresh loan quotas, and the February figure was "stronger than most had anticipated", Julian Evans-Pritchard of Capital Economics said in a note. "Excluding seasonality, credit growth actually did not slow," Yao Wei of Societe Generale in Paris told Bloomberg News.
"Although policy makers have repeatedly pledged to be less dovish, credit data continue to suggest a quite lenient policy setting." Analysts have been raising the alarm over the surge in China's debt as Beijing has flooded the market with credit to prop up economic growth. In an attempt to reduce risks, the central bank has rolled out monetary tightening policies in recent weeks, raising short-term borrowing rates for the first time since 2013.