(Bloomberg) — China’s credit expanded more than expected in March as the government accelerated bond offerings to help the economy offset the impact of surging US tariffs on Chinese goods.
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Aggregate financing, a broad measure of credit, rose 5.89 trillion yuan ($808 billion), according to Bloomberg calculations based on data released by the People’s Bank of China on Sunday. That compares with a median forecast of 4.96 trillion yuan by economists in a Bloomberg survey, and an increase of 4.83 trillion yuan in the same month a year ago.
Financial institutions offered 3.64 trillion yuan of new loans in the month, Bloomberg calculations showed. The median forecast was 3 trillion yuan.
Bigger government bond sales were a key driver of aggregate financing last month as business demand for longer-term credit stayed weak. March is also traditionally a strong month for borrowing because banks tend to extend more credit at the end of each quarter to meet lending targets.
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Net sovereign and local bond financing reached nearly 1.5 trillion yuan last month, the highest for any March since at least 2017, according to PBOC data. The bond deluge came after China vowed to front-load fiscal spending earlier this year on anticipation of looming trade tensions with the US.
China’s economy likely held up in the first quarter before the trade conflict between the world’s two biggest economies escalated. Newly added US levies on Chinese goods now stand at 145%, well above levels economists say would decimate bilateral shipments, which were worth $690 billion in 2024.
The impact of the punitively high tariffs is gradually kicking in, with US retailers suspending orders and halting shipments amid the deep uncertainty. At stake are millions of jobs in China’s sprawling manufacturing sector and Beijing’s ambitious goal of growing the economy by around 5% this year.
The US late Friday announced it exempted smartphones, computers and other electronics from its so-called reciprocal tariffs, which could provide some relief for Chinese exporters as the exclusion covers more than $101 billion in goods from the country. However, Trump’s policy flip-flop also underscores the massive uncertainty faced by the Chinese economy.
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