BEIJING (Reuters) -China’s new yuan loans contracted by 50 billion yuan ($6.97 billion) in July, falling well short of analysts’ forecasts and plunging from 2.24 trillion yuan in June, according to Reuters calculations based on data released by the People’s Bank of China.
This marks the first contraction since July 2005 and the largest monthly decline since December 1999, according to central bank data.
Analysts polled by Reuters had expected new yuan loans last month to reach 300 billion yuan, compared with 260 billion yuan a year ago.
July typically sees lower loan disbursements as it follows strong credit expansion in June when banks strive to meet quarterly targets.
Credit demand also had rebounded sharply in June as sentiment improved following rounds of trade talks in Europe and a tentative easing of trade tensions with the U.S..
The central bank does not provide monthly breakdowns. Reuters calculated the July figures based on the PBOC’s January-July data released on Wednesday, compared with the January-June figure.
The PBOC release did not give any explanations for changes in the January-July credit readings.
In the first seven months of the year, banks extended 12.87 trillion yuan in new loans, versus 12.92 trillion yuan in January-June, implying a net reduction of 50 billion yuan in July.
Banks issued 13.53 trillion yuan in new loans in the same period last year.
China’s economy slowed less than expected in the second quarter due in part to policy support and as factories took advantage of a U.S.-China trade truce to front-load shipments. But analysts warn the second half will be tougher as weak demand at home, a protracted property crisis and rising global trade risks ramp up pressure on Beijing.
The United States and China agreed early this week to extended their tariff truce for another 90 days, staving off triple-digit duties on each other’s goods, but business confidence remains fragile.
($1 = 7.1752 Chinese yuan renminbi)
(Reporting by Beijing Newsroom; Editing by Kim Coghill)
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