DBS Group Research anticipates that China’s credit demand will remain weak in July, with new yuan loans projected to be around RMB 10.8 billion and M2 money supply growth expected at 8% year-on-year [1]. Both corporate and household medium- to long-term lending are likely to soften, attributed to cautious borrowing sentiment and continued mortgage prepayments [1]. The report notes that precautionary savings remain elevated, while weak property prices continue to weigh on household wealth, further constraining investment and consumption [1].
DBS highlights that the persistent gap between M2 and M1 growth reflects subdued corporate investment and household consumption, indicating ongoing caution in the market [1]. The combination of weak lending and elevated savings is seen as a limiting factor for both investment and consumption in China [1].
No specific market reactions or analyst opinions regarding future policy changes were mentioned in the article. However, the overall tone suggests continued caution in the Chinese credit and liquidity environment [1].
CONCLUSION
DBS Group Research expects China’s credit demand to remain subdued in July, with weak lending and elevated savings constraining investment and consumption. The ongoing gap between M2 and M1 growth underscores persistent caution among corporates and households, reflecting a challenging environment for credit expansion.