China bank lending rebounds in March, more stimulus expected

New bank loans in China rebounded more than expected in March, recovering from a sharp drop the previous month, as policymakers pledge to ramp up stimulus to buttress the world’s second-largest economy against an escalating trade war with the United States.

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Chinese banks extended 3.64 trillion yuan ($500 billion) in new yuan loans in March, according to Reuters calculations based on data released by the People's Bank of China (PBOC) on Sunday.

Analysts polled by Reuters had predicted new yuan loans would rise to 3 trillion yuan last month, compared with a lower-than-expected 1.01 trillion yuan in February and 3.09 trillion yuan in the same month last year.

For the first quarter, total new loans rose to 9.78 trillion yuan from 9.46 trillion yuan in the same period last year.

“The financial data of March and the first quarter are both significantly better than expected,” said Dong Ximiao, chief researcher at Merchants Union Consumer Finance.

Zhou Hao, chief economist at Guotai Junan International, said the stronger-than-expected lending data could boost confidence in the economy and delay an expected cut in banks’ reserve requirement ratio (RRR).

Fiscal policy stimulus aimed at boosting domestic demand could still be the key to counter the impact from the escalating trade war, Zhou said.