China's banks normally start the New Year with a bang. This year it was more of a whimper.
New loans of 738.1 billion yuan ($117 billion) in January 2012 came in significantly below a consensus forecast of 1 trillion yuan, and a haul of 1.04 trillion yuan in the same month last year.
The Chinese New Year was a factor, translating into fewer working days for banks to actually make loans. But it isn't like the celebrations came as a surprise: Forecasts took account of the holiday and were still way too high. And in 2009, China's banks disbursed 1.6 trillion yuan of loans in January, despite Chinese New Year falling in the same month that year. When the need is there, having fewer working days is no barrier to lending.
The tentative conclusion to draw is that the government is targeting a lower total for new loans in 2012. Forecasts for the loan quota have ranged from 7.5 to 8.5 trillion yuan, compared to new loans of 7.5 trillion in 2011. January's showing suggests a number at the lower end of that range is likely.
On the plus side, weak lending in the opening month of the year shows China's government is in no rush to loosen policy, suggesting Beijing is not overly concerned about growth prospects. Those worried about China's burgeoning credit levels will also be pleased by lower loan growth.
But for China's liquidity addicted equity markets, which enjoyed a strong run in the opening weeks of the year, it might mean the party ends early this year.