ALBAWABA – The central bank of China and financial regulators met with bank executives Friday and urged Chinese lenders to issue more loans and support domestic demand, according to an official statement issued Sunday by the People’s Bank of China.
Authorities also urged for adjustments and optimization of policies for home mortgages at the meeting on Friday, without elaborating on the housing initiatives.
In July, Chinese lenders extended the smallest amount of monthly loans since 2009, Bloomberg reported.
China has repeatedly urged Chinese lenders to issue more loans, including banks, to increase lending to support the economy as the country struggles with weak demand, increasing the risks of prolonged deflation pressure.
Top leaders last week pledged to expand domestic consumption and support the private sector without detailing any new stimulus measures, the New York-based news agency added.
Yet, the government has so far resisted rolling out major stimulus efforts, despite a pro-growth tilt signaled by the Communist Party’s Politburo at the end of July.
The central bank last week reduced a key interest rate by the most since 2020, a surprise move that came shortly before the release of disappointing economic data for July. The reported showed growth in consumer spending, industrial output and investment sliding across the board and unemployment picking up.
China is reportedly clearing the off-balance sheet debt of local governments, according to Bloomberg.
Hidden Chinese debt comes mainly from local government financing vehicles (LGFV), companies that have borrowed on behalf of local authorities and that carry out infrastructure spending on public projects, like roads and railways.
There are no official figures for the size of LGFV debt, although the International Monetary Fund estimates it could be as high as $9 trillion.
