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China Economy News: Last month in April, China's credibility fell for the first time. This situation has arisen due to a slowdown in government bond sales and faster than expected credit growth. As far as aggregate credit, which measures credit, is concerned, it has declined by about 20 thousand crore yuan (about Rs 23 thousand crore) in April as compared to March. These figures came to light when news agency Bloomberg compiled data released by the People's Bank of China on May 11. After 2017, when comparable figures started coming out, this is the first time that there has been a decline. This indicates a contraction in financial activities.
According to Bloomberg Economics, the figure would be slightly lower if government funding were removed, and yet it is the first time it has declined since October 2005. Shadow banking, i.e. activities outside the formal banking system, i.e. informal banking activities also declined in April, putting pressure on overall credit.
Bond payment balance heavy despite sales in April
More government bonds were paid in last month than were sold in April, government data showed. The Chinese government has sold bonds at a slower rate than expected this year, resulting in a rise in sovereign bonds as supply remains weak against demand. At a Politburo meeting last month, China's top leaders called for the rapid issuance of special sovereign and local government special bonds. It is an important source of financing for infrastructure projects. China aims to issue special sovereign bonds worth 1 trillion yuan (Rs 11.55 crore) this year.
Due to which loan distribution slowed down
Last month in April, Chinese financial institutions distributed new loans worth 73.1 thousand crore yuan (Rs 843.98 crore), while the estimate was 91.6 thousand crore yuan (Rs 1057.58 crore). However, Bruce Peng, chief economist (Greater China) at Jones Lang LaSalle Inc., says there is no problem as the government will soon issue ultra-long government bonds. Regarding shadow financing, Bruce says the decline shows that authorities are focusing on controlling risk as the People's Bank of China has emphasized in recent months that it is keeping money in the financial system. Wants to end the inactivity of. Idle money means money that is put to use rather than invested. However, credit activities remain sluggish in April as banks are in no rush to meet their quarterly credit targets.