China's banks extended a record 2.9 trillion yuan ($458.3 billion) in new yuan loans in January, blowing past expectations and nearly five times the previous month as policymakers aim to sustain solid economic growth while reining in debt risks.
While Chinese banks tend to front-load loans early in the year to get higher-quality customers and win market share, the lofty figure was even higher than the most bullish forecast by economists in a Reuters poll.
Net new loans surpassed the previous record of 2.51 trillion yuan in January 2016, which is likely to support growth not only in China but may underpin liquidity globally as major Western central banks begin to withdraw stimulus.
Analysts polled by Reuters had predicted new yuan loans of 2 trillion yuan, up sharply from December's 584.4 billion yuan.
A more detailed breakdown of the loan data on Monday showed sharp pick-ups in demand for credit from both households and companies, auguring well for consumption and investment.
"Banks hope to lend early to get early returns... private investment and manufacturing investment are picking up due to firmer global demand (and) household loans could be boosted by property demand," said Nie Wen, an economist at Hwabao Trust in Shanghai.
"This indicates the economy may slow in the first half but any slowdown won't be sharp..."
Corporate loans surged to 1.78 trillion yuan from 243.2 billion yuan in December, while household loans rose to 901.6 billion yuan in January from 329.4 billion yuan in December, according to Reuters calculations based on central bank data.
Beijing is in the second year of a regulatory push to clamp down on riskier financial activity that has been fueled by a rapid build-up in debt.
But authorities are proceeding cautiously and keeping liquidity broadly supportive to avoid any sharp drag on the world's second-largest economy or excessive financial market volatility.
Reflecting that tricky balancing act, authorities are already warning China's banks to rein in new lending growth after the strong start to the year, financial magazine Caixin reported late on Monday, citing banking sources.
Broad M2 money supply also beat expectations, growing 8.6 percent in January from a year earlier, central bank data showed on Monday. Economists had expected the growth rate to edge up to 8.4 percent, from 8.2 percent in December.
Other data last week had painted a somewhat mixed view of the economy at the start of the year, with inflationary pressures easing -- possibly pointing to softening activity — but better-than-expected import and export growth.
Taken together, the stronger credit and trade data would appear to still support the consensus view that China will see only a modest pullback in GDP growth to around 6.5 percent this year, after a forecast-beating 6.9 percent in 2017.
However, analysts warn that investors will likely not get a clearer picture of the health of China's economy until March, because January and February month data are distorted by the timing of the lengthy Lunar New Year holidays.
Outstanding yuan loans grew 13.2 percent in January from a year earlier, also faster than an expected 12.5 percent rise and compared with an increase of 12.7 percent in December.
Last year, China's total new loans hit a record 13.53 trillion yuan, 7 percent more than the previous record in 2016.
The credit boom has been fueled by strong economic growth, a robust property market and a crackdown on riskier shadow lending, which has forced banks to shift some loans back onto their balance sheets.
Since the start of 2017, Chinese regulators have announced a slew of steps to coax financial institutions to reduce riskier activity and leverage, targeting everything from interbank lending levels to bond trading, negotiable certificates of deposit and entrusted loans.
In addition, the People's Bank of China has been gingerly nudging up money market interest rates, most recently in December. However, rates have also been slowly creeping higher on their own, as regulators look set to persist with the current "de-risking" campaign taking much longer than policy crackdowns in the past.
Those efforts appear to be bearing fruit. The outstanding amount of banking wealth management products (WMPs) grew just 1.7 percent last year, compared with a near 24 percent rise in 2016. Many of these products had strong links with the less-regulated shadow banking sector.
Analysts expect authorities to step up their efforts this year, focusing on local government debt, rising corporate and household debt levels and dealing with "zombie" companies.
On Monday, the state planner issued new rules for companies which are planning to issue bonds to put more pressure on debt-laden local governments to get their finances in order.
But analysts say more still needs to be done on structural reforms to rein in ballooning corporate debt, which has reached levels that the IMF and others have warned sharply raises the risks of a financial crisis.
China's total social financing (TSF), a broad measure of credit and liquidity in the economy, surged to 3.06 trillion yuan in January from 1.14 trillion yuan in December, additional data showed on Monday.
TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.
That can provide hints on activity in China's vast and unregulated shadow banking sector, which authorities have also been targeting in their campaign to reduce systemic risks.