Sustainability of China’s credit rebound in June in question, more support for real estate needed to avoid confidence trap – Citi Research
MACRO VIEWS & ANALYSIS
Sustainability of China’s credit rebound in June in question, more support for real estate needed to avoid confidence trap – Citi Research
MACRO VIEWS & ANALYSIS

Sustainability of China’s credit rebound in June in question, more support for real estate needed to avoid confidence trap – Citi Research

 

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China’s credit data for June came in better than expected, driven by a policy boost, which may have been achieved through increased short-term lending to the corporate sector, said Citi Research in a note. 

Household savings and lending patterns seems to be stabilizing in a low-confidence mode, it said.

The PBOC is taking more measures to support credit expansion, but the sustainability of the credit rebound remained to be seen, and meanwhile, residents’ confidence remains weak, with a notable deterioration in real estate sales in July, it said. 

The problems with China’s real estate sector appear to be further exacerbating and following a rapid slowdown in the second quarter, property sales in China’s top 30 cities in the first 10 days of July tumbled by about 30% year over year, it said, adding that more support and more signaling from policymakers may still be needed to avoid slipping into a confidence trap.