Shanghai, Nov 12:  China’s bank lending nearly halved in October compared with the month before, the central bank said today, reflecting lack of demand despite an interest rate cut aimed at boosting the flagging economy, the world’s second-largest. Chinese banks extended 513.6 billion yuan (USD 80.7 billion) in new loans in October, the People’s Bank of China said in a statement, down from 1.05 trillion yuan in September.Also Read - Coronavirus' Delta Variant Cripples Asian Countries; China, Thailand & Malaysia Witness Record Surge

The sharp decline came despite the central bank cutting interest rates last month, the sixth such move since November last year. “The decline in new loans was partly due to the week-long National Day holidays in the beginning of October,” ANZ Banking Group said in a research note. But it added the fall reflected “lack of demand and commercial banks’ caution… Due to rising non-performing loans”. (Also Read: UK broadcaster hopes Narendra Modi visit will result in settlement of outstanding CWG dues) Also Read - Chinese TikTok Star Xiao Qiumei Falls to Death While Recording Livestream on a Crane, Video Surfaces

Separately, total social financing — an alternative measure of credit in the real economy — was 476.7 billion yuan in October, down sharply from 1.30 trillion yuan in September and missing a median forecast of 1.05 trillion yuan in a survey of economists by Bloomberg News. “The dive in social credit… Reflects that the real economy is feeble and efficient demand is lacking,” Liu Dongliang, a senior analyst at China Merchants Bank in Shenzhen, said in a research note. Also Read - Fire Breaks Out at Warehouse in China; 14 Killed, 26 Injured

Chinese growth hit a 24-year low in 2014 and has slowed further this year, raising concerns on global markets. The country logged its worst economic performance since the global financial crisis in the third quarter, with growth of just 6.9 percent. Analyst said the weak lending figures underline the need for further loosening of monetary policy to boost the economy through more cuts in interest rates and bank reserve ratios — the amount of funds banks must keep aside. “This will put an end to the argument of whether there will be further monetary policy (easing) in the near future,” Liu said.