BEIJING (Reuters). China’s new yuan lending likely rebounded strongly in May, following a decline in April. A Reuters poll revealed that this is due to the central banking increasing its policy support for the slowing economic growth.

Chinese banks were estimated to have issued net new yuan loans of 1.3 trillion yuan (roughly $1194.71 billion) during April. That’s more than twice the amount of 645.4 billion in April according to the median estimate from 27 economists.

However, the new loans expected to be issued would not exceed the 1.5 trillion Yuan that was granted in the same month one year ago.

As a result of a decline in infections, the Chinese government is offering support to the slowing economy. Shanghai and other Chinese cities are easing COVID-19 restrictions and mobility restrictions.

Cabinet announced last month a set of policy measures, which included tax credit reductions that are larger and delayed social security payments. Also, loan repayments for economic support were postponed.

Local media reports that China’s financial officials had instructed commercial banks to accelerate their lending.

The central bank reduced its benchmark mortgage rate by an unanticipatedly large margin in May. This was its second decrease this year. It did so to help revive the struggling housing sector and support the economy.

China continues to face downward pressure in its economy and will try to attain reasonable economic growth during the second quarter. This was stated Wednesday by the Cabinet, according state media.

China pledged that it would maintain a nominal growth in money supply and social finance growth of approximately the same level as this year’s economic growth.

According to the poll, outstanding yuan loans are expected to increase by 10.7%, in May, as compared to 10.9% in April. The broad M2 cash supply growth rate in May was 10.4%. This is down from 10.5%.

China’s 2022 quota has been set at 3.65 trillion Yuan. This is unchanged from last year.

An acceleration of government bond issuance might help to boost total social finance (TSF), broad credit and liquidity. TSF outstanding rose by 10.2% to April from 10.6% March.

TSF should fall to 2.02 trillion Yuan (from 910.2 billion in April) by May.

($1 = 6.6765 renminbi)