CHINA reported strong credit growth for February, with money supply expanding at the fastest pace in nearly 7 years, as the government looks to support a nascent economic recovery amid rising global risks.

China’s optimization of its COVID-19 response in December and other policy easing measures have started to rekindle credit demand in the world’s second-largest economy, after a COVID-induced slump in business and consumer confidence in the last few years.

Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, quickened to 9.9% in February from a year earlier, the highest since November 2022, and rising from 9.4% in January.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.

Other key credit gauges also showed a solid pick-up.

Broad M2 money supply grew 12.9% from a year earlier, central bank data showed Friday, the strongest pace since March 2016. The reading was well above a 12.6% pace in January.

New bank lending fell much less than expected in February from a record high the previous month.

Chinese banks extended 1.81 trillion yuan (US$260 billion) in new loans last month. Analysts had predicted they would fall to 1.50 trillion yuan from 4.9 trillion yuan in January, and compared with 1.23 trillion yuan a year earlier.

“China’s strong credit extension in February has somehow offset the recent concerns clouding the pace of economic recovery, suggesting that the overall economy is still on a solid footing,” said Zhou Hao, economist at Guotai Junan International.

A pull-back in February loans from January had been widely expected because Chinese banks tend to front-load loans at the beginning of the year to get higher-quality customers and win market share.

Also, the central bank had told some banks to slow the pace of lending to contain risks after January’s record credit spree, three bankers said last month. The banks were told to control the scale of new loans made in February.

Household loans, mostly mortgages, fell to 208.1 billion yuan in February from 257.2 billion yuan in January, while corporate loans fell to 1.61 trillion yuan from 4.68 trillion yuan.

China has set a modest target for economic growth this year of around 5% after it cooled to 3% last year. (SD-Agencies)