ChinaCreditGrowthSeenSlowingAmidHoliday,WeakDemand

China’s credit growth likely slowed in February as the Lunar New Year holiday and subdued demand dampened lending activity.

New yuan loans are forecast to total 949.6 billion yuan ($138.2 billion), according to the average estimate from a Caixin survey of 13 institutions.

That would be slightly below the 1 trillion yuan recorded a year earlier and sharply down from January’s 4.7 trillion yuan. Lending typically surges at the start of the year.

Total social financing (TSF) — a broad measure of credit and liquidity in the economy — is expected to increase about 1.9 trillion yuan, down from 2.2 trillion yuan a year earlier, the survey showed.

Growth in M2, a broad measure of money supply, is projected to slow to 8.8% year-on-year at the end of February from 9% a month earlier.

Analysts attribute the moderation largely to seasonal factors and still-soft economic momentum.

He Shan, an economist at BNP Paribas, said high-frequency indicators — including auto retail sales — suggest economic momentum has not improved markedly since the start of the year, leaving credit demand from the real economy likely weak.

February is typically a slow month for lending, a pattern amplified this year by the holiday, according to Yang Fan, chief macro and policy analyst at Citic Securities.

BNP’s He expects the central bank to cut policy rates by 20 basis points this year, with potential easing beginning in mid-to-late March.

Contact editor Lin Jinbing (jinbinglin@caixin.com)