Courtesy of Also Sprach Analyst.
A week or so ago, we learned that the big four Chinese banks (ICBC, Bank of China, China Construction Bank and Agricultural Bank of China) lent virtually nothing for the first two weeks of May.
Now, we learn that the big four banks have still lent virtually nothing for the first 20 days. Well, just RMB34 billion, to be precise, compared with over a trillion in March for the total banking system, according to 21cbn.com. At the same time, the big four banks lost RMB270 billion of deposits in the first 20 days
However, it is noted that apparently the NDRC has increased the approval process of projects. On 21 May alone, there were 100 projects in the process of being approved, which is more than the count for the first 20 days of the month. Perhaps this is because of the latest push to support growth and bring forward infrastructure investment projects.
But that aside, demand for credit remains very weak according to various banks, and short-term loans and bills remain the main sources of new loans as opposed to long-term loans, as we have seen in the past few months’ composition of new loans. Just as expected, with the economy slowing, the demand for credit will be weak, and the overall picture is still consistent with the rather sinister speculation of debt deflation.
It is yet to be seen if the government will be able to force banks into lending in the coming months to support all these infrastructure projects, which in turn are designed simply for the sake of manufacturing GDP growth.