According to the report of the Chinese central bank, the volume of new lending in local currency in July was 345.9 billion yuan ($47.93 billion), which is significantly less than the previous 3.05 trillion yuan. This is the lowest figure since November 2009.


Reuters analysts predicted a reduction of only up to 800 billion yuan. The volume of lending in July 2022 was 679 billion yuan. The total amount of financing (including bank loans, off-balance sheet loans, stock and bond offerings) also decreased to 528.2 billion yuan, down from 4.22 trillion yuan in the previous month. Analysts had expected 1.1 trillion yuan.


The agency also points out that credit in China usually shrinks in July due to seasonal factors, but such weak performance became evident even after other alarming signals, such as the onset of deflation and a sharp decline in foreign trade.


"We foresee a further cut in the key policy rate (as early as next Tuesday) and an increase in government bond issuance in the coming months. However, unless there is a significant improvement in business and household sentiment, this is likely to marginally support the increase in lending," Capital Economics analysts said.


Bad data on crediting primarily reflects the insufficient need for financing from the real economy. Earlier, US President Joe Biden called China a "ticking time bomb" due to economic problems and said that the "bad guys" tend to take negative actions in case of problems.