China bank lending slumps in April amid debt concerns

Bank loans reached 555.6 billion yuan ($85.2 billion) in April, down sharply from 1.37 trillion yuan in March, the People’s Bank of China (PBoC) said.

The latest figure missed a median forecast of 1.3 trillion yuan in a Bloomberg News survey.

“Following signs of an upswing in the economy, policymakers have refrained from further policy easing in recent months and appear to be shifting their focus back to credit risks and structural reform,” Capital Economics said in a research note after the release of the data.

On May 9, the People’s Daily newspaper, the Communist Party’s mouthpiece, cited an unnamed “authoritative” source saying China must turn off the taps of credit-driven growth to avoid a financial system crisis in the face of rising bad loans.

The government has cut interest rates six times since late 2014 and also lowered the ratio of reserves that banks need to set aside, in an effort to boost lending and stimulate the economy.

China’s economy grew 6.7 percent year-on-year in the first quarter, its slowest expansion in seven years.