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China's Bank Lending Declines In February

China's bank lending decreased in February as the coronavirus outbreak weighed on economic activity, data from the People's Bank of China showed on Wednesday.

Banks extended CNY 906 billion local currency loans in February compared to the expected level of CNY 1.1 trillion.

At the same time, aggregate financing decreased to CNY 855.4 billion. Outstanding total social financing grew 10.7 percent from the same period last year.

Policymakers' tight grip over the financial system allowed them to keep credit flowing last month, Julian Evans-Pritchard, an economist at Capital Economics, said.

The net new lending figures are highly seasonal, so it makes sense to focus on the year-on-year change in the outstanding amounts to gauge the underlying trend, the economist noted.

Evans-Pritchard said a drop in borrowing by consumers due to fewer property and car sales was offset by a pick-up in loans to companies, in large part thanks to official measures such as the PBoC's special coronavirus relending facility.

Policy support, including the roll out of "Epidemic Prevention Bonds" offering preferential rates to firms and looser rules on private placements, also helped to boost equity and corporate bond issuance, the economist added.

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