China's new bank lending unexpectedly contracted in July as the central bank sought to shift attention away from loans as the main measure of financing.
New loans stood at a minus 340 billion yuan last month, compared with the 1.61 trillion yuan in June, official data showed Friday. Economists surveyed by The Wall Street Journal had expected CNY280 billion in new loans.
The surprise contraction partly reflected seasonal factors but also showed weak demand for borrowing as China's yearslong property slump continued.
"New bank loans posted a record contraction, reflecting outright household loan repayments and contracting long-term corporate loan demand." Barclays economists said in a note.
Sluggish housing activity and poor labor market sentiment continued to depress household credit demand, while lingering anxieties about income and employment prospects further dampened consumers' willingness to borrow, the investment bank said.
