New bank loan issuance in China likely plunged in July from June, a Reuters poll showed on Thursday, weighed down by weak credit demand and seasonal factors even as the central bank keeps monetary policy accommodative to support growth.
Chinese banks issued around 300 billion yuan ($41 billion) in net new yuan loans in July versus 2.24 trillion yuan in June, showed the average of 17 economist estimates in a Reuters poll.
July typically sees lower loan disbursement as it follows strong credit expansion in June when banks strive to meet quarterly targets.
Elevated government bond issuance and improved corporate bond issuance likely boosted growth of total social financing, or broad credit, to 9.1% in July year-on-year from 8.9% in June, Nomura said in a research note.
The government two weeks ago pledged to boost investment in agriculture to stabilise supply of grain and other key produce. This week, it said it would encourage banks to provide more medium- and long-term financing to advanced manufacturing industries such as those related to integrated circuits.
Manufacturing activity shrank for a fourth successive month in July, indicating that an export surge before the U.S. imposed new tariffs started to fade while domestic demand remained dull.
Easing friction with the U.S. may give China room to introduce stimulus to encourage consumption. The world's two largest economies are seeking a 90 day extension to a trade truce which would otherwise expire on August 12.
The government is due to release loans and money supply data on August 8-15.
Cash in circulation plus certain types of deposit such as corporate time deposits and household savings - known as M2 money supply - likely grew 8.2% in July from a year earlier, versus 8.3% in June, the poll showed.
Economists estimated outstanding yuan loans grew 7.0% in July from a year prior, compared with 7.1% in June.
Total social financing - a broad measure of credit and liquidity - likely fell to 1.5 trillion yuan in July from 4.2 trillion yuan in June, the poll showed. Any acceleration in government bond issuance could boost such financing.
The measure includes off-balance-sheet forms of financing beyond conventional bank lending, such as initial public offerings, bond sales and loans from trust companies.
($1 = 7.1803 Chinese yuan renminbi)
(This story has been refiled to say Thursday, not Friday, in paragraph 1)
