Corporate demand for bank credit wanes in China

Bank lending might have plunged 30% in April from March.

The official China Securities Journal indicated this was a worrisome indication of the depth of China’s economic slowdown. Unofficial estimates of total loans for April came to US$111 billion and analysts believe this figure could be correct given past experience.

The Journal based the estimate on the US$16 billion in loans extended by the Big Four state-owned banks until April 25. The Big Four traditionally account for some 30% of new loans.

The Big Four consists of the Bank of China; China Construction Bank; Industrial and Commercial Bank of China and Agricultural Bank of China.

Analysts, however, widely expected new loans in April to drop from the massive US$160 billion lent out in March. They estimate new loans to hit US$1.3 trillion this year.

Chinese banks lent US$390 billion in this first quarter compared to US$249 billion during the same period last year. New loans amounted to US$1.18 trillion in 2011.

China’s economy seems to be recovering, however, with the official purchasing managers' index (PMI) rising to a 13 month high in April.