Chinese lending beats forecasts in September

Chinese lenders extended more loans in September than analysts had anticipated, but the figures masked a slight slowdown, according to economists.

Local currency bank loans increased by 1.22trn yuan in September, versus 949bn yuan in the month before.

That was more than 1.0trn yuan forecast from economists.

Nonetheless, the increase in lending was mostly seasonal, economists at Capital Economics cautioned.

Another, broader, measure of new credit, known as total social financing also grew, rising by 12.5% year-on-year to 1.72trn yuan (consensus: 1.39trn yuan) after growth of 12.3% in the month before.

Here too however Julian Evans-Pritchard, China economist at the think-tank, pointed out that the TSF measure was no longer the best guide to economy-wide trends in lending due to the sharp increase in issuance of government bonds in recent years.

"The upshot is that while credit growth remains rapid relative to a couple of years ago, it has been slowing in recent months. Looking ahead, we expect the pace of lending to cool further," Evans-Pritchard said.

If government bonds were included in the tally then Capital Economics's augmented measure of TSF slowed from 16.8% year-on-year to 16.7%.

Tighter regulations also saw shadow financing barely grow last year, Evans-Pritchard said.

"The economy should continue to be supported in the near term by the lagged impact of earlier policy easing. However, the slowdown in credit is likely to prove a headwind to growth next year."