CNY 2.85 trillion of credit was expended by banks to Chinese internal customers this March, based on a report released by the Central Bank of China on Friday (April 10). The total credit granted by banks in the first quarter of 2020 also rose and reached a ceiling at CNY 7.1 trillion, more than CNY 1.19 trillion in the same quarter last year. This record achieves through flexible policies adopted by the People's Bank of China (PBOC) as a bank in relaxing interest rates and reserve requirements ratios into a stimulus bank to provide loans to households and businesses in the midst of recovering economic activity after the coronavirus impact.
CNY 989.1 billion of the total CNY 2.85 trillion taken by households is widely used to finance mortgages. The remaining CNY 2.05 trillion was taken by businesses to restart production to meet surging demand and carry on critical government projects that will soon restart. The fresh flow of capital, in addition to being driven by bank loans, is also supported by bond sales by the local government, which reached CNY 1.6 trillion with CNY 1.1 trillion are special bond. That makes the overall total social financing (TSF), a broad measure of credit and liquidity in the economy, reaching a record 5.15 trillion which is an increase of 10.7% from the acquisition in February 2020 and 11.5% from the acquisition in March the previous year.
The achievement of this credit record in March for the central bank was the result of their efforts to maintain liquidity in "sufficient and rational conditions" in the previous month while predicting that rapid credit growth in the second quarter of 2020. However, a source from the central bank said that drastic measures such as steep rate cuts or quantitative easing moves undertaken by the Fed would not be done by the PBOC to avoid the risk of bad credit and property guarantees. Some analyzes also said that they would maintain a cautious view of the Chinese economy, which dependent on further prevention of coronaviruses.
