Total social financing in China rose last month due to a surge in corporate bond issues, but bank loans fell to a 14-month low, central bank data showed yesterday. 

 

There were 1.29 trillion yuan (US$206.4 billion) in total social financing, including loans, bank acceptance bills, corporate bonds and equity financing, in October, up 503.8 billion from the same month of last year, the People's Bank of China said in a statement.

 

Corporate bond issues surged to 299.2 billion yuan last month, a record high since compiling of the data started in 2002.

 

Meanwhile, banks extended 505.2 billion yuan in local currency loans in October, a drop of 81.6 billion yuan from a year earlier, the central bank said. The lending was also the lowest since September 2011 and fell short of market hopes of 580 billion yuan, according to a Bloomberg News survey.

 

"It showed that the corporate sector was becoming less dependent on bank lending, which is favorable for deepening China's financial institution reforms," HSBC economists Ma Xiaoping and Qu Hongbin said in a report. "The total social financing data suggest that policy makers remain comfortable in their current strategy for continuing China's gradual growth recovery."

 

Economists noted that mid- and long-term bank loans were rising steadily over the past months, indicating government's efforts to bolster the economy via investment on infrastructure and urban development are bearing fruit.

 

"Bank loans longer than one year were 283 billion yuan in October, similar to that in September and higher than the quarterly average of 260 billion (yuan)," said Shen Lan, an economist at Standard Chartered Bank. "Most of them were invested in infrastructure and urban development." 

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