NEW bank loans in China likely rose in September, but other key gauges of credit growth remained lackluster, a recent poll showed, reinforcing expectations the government needs to deliver more support to stabilize the economy.

Chinese banks are expected to have issued 1.4 trillion yuan (US$196.02 billion) in net new yuan loans last month, up 16 percent from 1.21 trillion yuan in August but largely in line with the tally in September last year, according to a median estimate in the latest survey of 30 economists.

Broad M2 supply was seen unchanged from 8.2 percent growth in August.

But growth of outstanding loans was expected to decelerate for a sixth straight month.

Annual growth of outstanding loans in September was seen edging down to 12.3 percent in September, the lowest since July 2002, from August’s 12.4 percent.

Some analysts say the annual comparison is a better way to assess trends in China’s credit growth, rather than more volatile monthly readings.

In a bid to boost bank lending, the central bank has pumped out trillions of yuan in liquidity by repeatedly cutting banks’ reserve requirement ratios (RRR) since early 2018.

Offsetting the modest pickup in yuan loans, survey respondents expect total social financing (TSF), a broad measure of credit and liquidity in the economy, to drop to 1.8 trillion yuan in September from 1.98 trillion in August.

The expected decline is likely due to lower issuance of both corporate and local government special bonds.

Net issuance of local government bonds are estimated to fall notably as the provincial authorities are already close to exhausting their annual bond quotas.

(SD-Agencies)