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China shift toward credit-light growth slows lending demand
Standard Chartered says loan growth weakness is broad-based, especially in housing-related lending, as more services and high-tech activity rely on direct financing.
Standard Chartered analysts, Carol Liao and Moriarty Lam, say China’s loan demand is weakening because growth is becoming more credit-light, even as real GDP remains stable and recent reflation continues.
They point to broad weakness across housing-related lending and other sectors, arguing the economy’s transition is changing how activity is financed. In their view, new services and high-tech growth engines lean more on direct financing rather than bank lending.
The analysts tie the shift to China’s debt sustainability, saying it is important for reducing pressure on credit growth while supporting financial-market development.