According to the latest banker survey, only 33.1% of bankers in China believe that the country’s current macroeconomic situation is normal in the second quarter, a decrease of 29% from the first quarter.

At the same time, those bankers who believe that China’s current monetary policy is “moderate” also decreased 12.6% from the first quarter.

The results were revealed on June 29 when China’s central bank released the survey of bankers for the second quarter of 2022.

The survey shows that, in the Banking Climate Index, only the sub-index of Monetary Policy Sentiment increased in the quarter. The other sub-indexes all declined, such as the Loan Demand, Bankers’ Confidence, Profitability of China’s banking industry, and the macroeconomic heat sub-index.

The respondents of the questionnaire are heads of various banking institutions in China, as well as presidents of the first- and second-tier branches of these banks, or vice presidents in charge of credit.

Song Weijun is a political and economic researcher with 27 years of experience in China’s financial industry.

He said that fewer bankers think the macroeconomic condition is “normal,” mainly because China’s Covid epidemic prevention policy has worried the banking sector and businesses.

Song explained that the pandemic has blocked administrative areas, leading to disruption of economic operations, stagnation of supply and industrial chains, difficulty in maintaining business operations, and unrecoverable bank loans.

And although Chinese banks are eager to increase the scale of loans, businesses are afraid or unwilling to borrow to expand operations. As a result, the economy faces the triple pressure of “shrinking demand, supply shock, and weakening expectations.”

It also is worth noting that China’s financial condition is at higher risk following the thunderstorm incident of Henan rural banks that occurred in April. The depositors could not withdraw money from their accounts and have been trying to retrieve their savings, but the problems have not been resolved.

The risks in the banking sector have become the focus of depositors and investors. 

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