New yuan loans for the month of April came in at -¥10 billion. Yes, that’s another negative reading and one to follow up the supposed blip from July last year. Once is maybe a coincidence, but twice and it’s starting to draw questions of whether there is an underlying problem with credit demand conditions.

That means the year-to-date figure for total new bank lending this year is ¥8.59 trillion. It marks a notable drop from the roughly ¥10 billion figure from January to April last year.

So, what does this mean?

It is quite a disappointing number, all things considered. The recent focus and policy shift by Beijing has been to do anything in order to bolster domestic demand conditions. Credit demand falling and being this subdued to start the year suggests weakening economic momentum, and that’s not a good signal of how things are playing out on the ground.

If the trend continues as such, it will prompt Beijing officials to want to ease monetary policy further. So, the pressure valve is certainly being turned on right now as flagging credit conditions are dropping a big hint on household and business appetite.

What more now with the US-Iran conflict, pushing energy prices higher and also weighing on China’s economy. As a reminder, China is one to also rely heavily on Iran oil imports (~15% of total) over the years. So, it’s not just higher prices that are weighing.

This article was written by Justin Low at investinglive.com.