People
purchasing
fruit
at
an
agricultural
trade
market
on
May
11,
2024
in
Lianyungang,
Jiangsu
Province
of
China.
Vcg
|
Visual
China
Group
|
Getty
Images
BEIJING
—
As
China’s
economy
moves
into
the
second
quarter
of
the
year,
a
few
indicators
are
pointing
to
sluggish
growth
ahead
if
things
don’t
turn
around,
raising
expectations
for
monetary
policy
easing.
The
National
Bureau
of
Statistics
is
due
to
release
data
on
retail
sales,
industrial
production
and
fixed
asset
investment
for
April
on
Friday.
Analysts
polled
by
Reuters
as
of
Tuesday
expect
a
slight
increase
compared
to
March.
The
same
day,
China
plans
to
issue
its
first
ultra-long
bond
—
30
years
in
term
—
as
Beijing
kicks
off
a
previously
announced
program
for
a
total
of
1
trillion
yuan
($138.25
billion)
in
funds
for
major
strategic
projects.
The
Ministry
of
Finance
has
not
specified
what
the
first
tranche
will
be
used
for.
Some
of
the
weakness
speaks
to
genuine
sluggish
demand
in
China
at
present.Hui
ShanGoldman
Sachs
“With
issuances
running
all
the
way
until
November,
it
is
likely
some
of
the
proceeds
spending
(and
therefore
benefit
to
the
economy)
will
only
feature
in
H1
next
year,”
Louise
Loo,
lead
economist
at
Oxford
Economics,
said
in
a
note
Tuesday.
The
firm
expects
this
week’s
economic
data
releases
to
show
a
“softening
in
economic
momentum,”
affirming
its
forecasts
for
the
central
bank
to
cut
rates
by
the
end
of
June.
The
central
government
bond
program
comes
as
the
drag
from
real
estate
persists,
while
businesses
and
consumers
largely
remain
conservative
about
spending.
The
People’s
Bank
of
China
over
the
weekend
released
new
loan
data
for
April
that
pointed
to
a
sharp
slump
in
demand,
with
several
metrics
at
their
lowest
in
at
least
two
decades.

watch
now
Goldman
Sachs
and
other
firms’
analysts
were
quick
to
point
out
the
one-month
figures
were
affected
by
changes
to
how
official
data
is
calculated,
as
well
as
a
crackdown
on
loans
used
for
financial
purposes
rather
than
business
expansion.
“Some
of
the
weakness
speaks
to
genuine
sluggish
demand
in
China
at
present,”
said
Hui
Shan,
Goldman
Sachs’
China
chief
economist,
in
a
note
Sunday.
Outstanding
loans
in
Chinese
yuan
grew
by
9.6%
year-on-year
in
April,
the
same
pace
as
March
and
the
lowest
since
records
began
in
1978,
according
to
official
data
accessed
through
Wind
Information.
Businesses’
loan
demand
falls
New
bank
loans
to
businesses
and
government
organizations
dropped
sharply
in
April
from
March,
as
did
new
loans
to
households,
according
to
official
data
accessed
through
Wind
Information.
What’s
concerning
to
analysts
at
Clocktower
Group
is
that
the
12-month
moving
average
for
both
categories
of
new
loans
has
started
to
trend
downward
for
the
first
time
since
the
financial
crisis
in
2008.
“If
the
public
sector
does
not
come
to
support
credit
growth
in
a
timely
manner,
a
sharp
growth
deceleration
is
likely
to
occur
going
forward
as
economic
agents
will
be
forced
to
cut
consumption
and
investment
to
meet
their
debt
obligations,”
the
firm
said
in
late
April.
On
a
12-month
moving
average
basis,
the
new
bank
loans
category
including
businesses
saw
a
slight
increase
in
April
versus
March,
while
new
household
loans
fell
during
that
time,
according
to
CNBC
analysis
of
data
accessed
through
Wind.
The
amount
of
new
business
loans
is
still
far
higher
than
what
it
was
in
2019,
although
that
of
households
has
fallen
below
that
level,
the
data
showed.
A
survey
by
The
China
Beige
Book
in
April
found
that
corporate
borrowing
fell,
dragged
down
by
services,
while
manufacturing
saw
an
increase
in
demand.
The
overall
decline
came
despite
more
loans
getting
approved
and
lower
interest
rates,
making
it
cheaper
to
borrow.
M2,
a
measure
of
money
supply
that
includes
cash,
cash
equivalents
and
certain
deposits,
grew
by
7.2%
in
April
from
a
year
ago,
its
slowest
pace
on
record
going
back
to
1986,
according
to
official
data
accessed
through
Wind
Information.
Less
emphasis
on
credit
expansion
“Looking
ahead,
the
growth
of
new
CNY
loans
and
M2
may
gradually
slow
down
further,
as
the
PBOC
highlighted
weakening
relationship
between
economic
growth
and
credit
expansion,”
Goldman
analysts
said
in
a
separate
report
Sunday,
referring
to
the
central
bank’s
quarterly
monetary
policy
report
released
Friday.
“We
continue
to
expect
two
more
RRR
cuts
and
one
policy
rate
cut
through
the
remainder
of
this
year,”
they
said.
RRR
refers
to
banks’
reserve
requirements,
or
the
amount
of
cash
they
need
to
have
on
hand.
PBOC
Governor
Pan
Gongsheng
told
reporters
in
March
there
was
room
to
further
cut
that
reserve
requirement.

watch
now
“April
credit
data
are
disappointing,
but
that’s
mainly
due
to
regulatory
changes
rather
than
a
sharp
deterioration
in
the
underlying
demand,”
Macquarie’s
Chief
China
Economist
Larry
Hu
said
in
a
report.
“Policymakers
don’t
want
to
have
another
credit-fueled
recovery.
Instead,
they
are
happy
to
rely
on
exports
and
new
energy
sectors
to
drive
growth,
at
least
for
now,”
he
said.
He
expects
exports
to
remain
on
track
for
5%
growth
this
year,
while
noting
the
autos
sector
has
done
well.
China’s
exports
have
held
up
despite
rising
trade
tensions.
Data
released
last
week
showed
exports
grew
year-on-year
in
April,
up
by
1.5%
and
in
line
with
expectations,
while
imports
grew
far
more
than
expected.
Separate
figures
released
over
the
weekend
showed
a
modest
pickup
in
consumer
prices
in
April.
But
the
measure
of
prices
at
factories
continued
to
decline.
However,
real
estate,
which
once
contributed
to
at
least
a
quarter
of
China’s
economy,
remains
a
drag,
despite
a
growing
number
of
cities
easing
purchase
restrictions.
Real
estate
sales
are
increasingly
shifting
to
the
secondary
market,
which
means
developers
don’t
benefit
much
in
a
market
that
is
still
“searching
for
a
bottom,”
S&P
Global
Ratings
said
in
a
report
early
last
week.
The
S&P
analysts
expect
China’s
primary
residential
market
to
shrink
by
16%
this
year.
China’s
index
on
home
prices
is
also
due
out
Friday.
Looking
further
ahead,
investors
are
awaiting
a
major
government
meeting
scheduled
for
July
for
signals
on
longer-term
economic
policy.
“Separately,
the
PBOC
suggests
it
will
study
policies
to
help
digest
existing
housing
inventory
and
improve
new
housing
supplies
in
order
to
stabilize
the
property
market,”
Morgan
Stanley
analysts
said.
“We
think
this
echoes
the
message
from
the
recent
Politburo
meeting
regarding
the
property
market,
and
shows
monetary
policy
could
potentially
be
used
as
part
of
the
support
measures
to
help
China
deal
with
its
significant
property
inventory.”
—
CNBC’s
Michael
Bloom
contributed
to
this
report.