- Wang Jun, senior economist at China Centre for International Economic Exchanges
Bank lending in the world's second biggest economy declined sharply in October, while money supply growth slowed, fuelling concerns over a more dramatic slowdown in the Chinese economy and adding to signs that further stimulus measures are needed, including cutting interest rates. Domestic banks extended 548.3 billion yuan ($89.5 billion) in new loans, according to the People's Bank of China, down more than a third from the 857.2 billion yuan lent in September, signalling deepening economic weakness in the final quarter of the year. The decline in credit came after some banks reported bad loans surged at their fastest pace in two years over the summer, while deposits shrank, limiting their ability to lend and highlighting growing strains on the financial system as China's economy slows. The world's second-largest economy grew 7.3% in the July-September quarter, lower than the 7.5% in the previous three months and the slowest since 2009 at the peak of the global financial crisis.
Moreover, broad M2 money supply rose 12.6% in October from a year ago, against analysts' expectations of a 12.9% increase and the second slowest growth rate in more than two years. China's President Xi Jinping acknowledged that the Chinese economy faces financial risks, but expressed confidence they are manageable, describing them as "not that scary".
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