Major Chinese lenders extend more credit lines to support manufacturing sector, economic recovery

Six major Chinese banks issued a combined 9.53 trillion yuan ($1.32 trillion) in loans in the first nine months of 2022, with Industrial and Commercial Bank of China (ICBC)'s outstanding loans to the manufacturing sector seeing a nearly 40-percent rise, amid a broader campaign to bolster the real economy, which has been disrupted by COVID-19 flare-ups.

Analysts said that new loans began to increase in September as the government's economic support policies took effect, and demand for credit ramped up. Big banks are poised to play a bigger role in the remaining months of the year to help jumpstart the economy.

The country's top five lenders - ICBC, Bank of China (BOC), China Construction Bank (CCB), Bank of Communications (BOCOM) and Agricultural Bank of China (ABC) - all issued statements on Sunday, vowing to further support fast recovery of the real economy with strengthened measures. The Postal Savings Bank of China, the sixth state-owned bank, issued a similar statement.

During the first nine months of 2022, ICBC's outstanding loans to manufacturing firms exceeded 810 billion yuan, in addition to a 34-percent increase in green loans and a 59.2-percent increase in credit extended to new and emerging industries.

ICBC is the largest bank in the world by revenue. Other top commercial banks in China made similar contributions. BOC's lending to manufacturing sector rose by 18 percent in the first three quarters and CCB saw a 32-percent-increase in such loans from last December.

Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Monday that increased loans will help a great number of enterprises ease their cash flow crunch, which will be a great help in stabilizing the economy and fostering growth.

Banks' new loans in China nearly doubled month-on-month in September, which beat expectations as the government's support policies landed.

Per data released by the People's Bank of China, the central bank, Chinese banks extended 2.47 trillion yuan in new yuan loans in September, up from August's 1.25 trillion yuan. 

Lian Ping, head of the Zhixin Investment Research Institute, told the Global Times on Monday that major lenders stand ready to extend more credit in the fourth quarter to lift the economy, benefiting from both recovering demand for credit and ample market liquidity. 

Lian said that credit growth is set to expand as the central government's fiscal support for sectors including infrastructure frees up more pent-up demand.

Lian said that new loans in the fourth quarter will account for a larger share than the 20 percent that they traditionally occupy in normal years, and bigger banks will outpace smaller ones in loan extension.

At the end of September, the central government called for concrete measures to ensure the economy to grow within a reasonable range in the fourth quarter, noting that the economy withstood downward pressure after the timely introduction of stabilization measures. The call for more efforts followed a series of support policies rolled out in August.

Wu Chaoming, deputy head of the Chasing Research Institute, predicted that more favorable policies will be launched to facilitate housing sale and domestic consumption, and credit extension from banks is expected to rise further in the fourth quarter, noting the economic recovery is at a critical phase and major state-owned lenders will act as pillars.

Meanwhile, China's policy-oriented banks are working toward the same goal. One such bank, China Development Bank, provided loans of more than 13 billion yuan in the first three quarters of 2022 to help small and medium-sized enterprises.

A survey by the central bank published on October 9 put a reading of the aggregate borrowing demand index in the third quarter at 59 percent, up 2.4 percentage points from the second quarter, indicating clear signs of recovery.

Zhao Chenxin, a senior official with the National Development and Reform Commission, said on Monday that current indicators point to a marked improvement in the economy in the third quarter.