China Loans Plunge to 14-Year Low, Adding to Deflation Risk

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The plunge in loans is another sign of weak demand in China and adds to a raft of negative data showing deflation in the economy

(Bloomberg) — Chinese banks extended the smallest amount of monthly loans in July since 2009, a further sign of weak demand in the world’s second-largest economy that raises the risk of prolonged deflationary pressure.

New loans reached 345.9 billion yuan ($48 billion) in July, the People’s Bank of China (PBOC) said Friday, less than half the 780 billion yuan that economists forecast in a Bloomberg survey. Aggregate financing, a broad measure of credit, was 528.2 billion yuan last month, also well below estimates.