Visitors check an electric car at a dealership in Beijing. File/Associated Press

Auto sales in China, the world’s biggest market, surged in January with a 30 per cent jump from the same month a year earlier, the tenth month of gains, as China continued to lead the global automobile industry’s recovery from the COVID-19 pandemic.

Sales reached 2.5 million vehicles in January, data from the China Association of Automobile Manufacturers (CAAM) showed.

Sales of new energy vehicles (NEVs), including battery-powered electric vehicles, plug-in petrol-electric hybrids and hydrogen fuel-cell vehicles, increased 239% in January to 179,000 units. NEV makers such as homegrown Nio and Xpeng as well as foreign groups, such as Tesla, are expanding manufacturing capacity in China where the government has promoted greener vehicles to reduce air pollution.

China’s industry ministry said on Tuesday it met with automotive and chip companies and asked them to help ease a supply shortage which has forced many automakers across the world to halt production.

The Ministry of Industry and Information Technology urged companies to “place high importance on” and “increase production capacity allocation” for China’s auto market, the world’s biggest, according to a statement on its website.

It did not name which companies attended the meeting.

The ministry also asked the firms to improve logistics efficiency and supply chain coordination to support the industry’s development, according to the statement.

An acute shortage of chips since the end of last year, which in some cases has been exacerbated by the former US administration’s sanctions on Chinese chip factories, has hit the automotive sector particularly hard.

Automakers from General Motors to Stellantis and Honda Motor are shutting assembly lines due to the shortages, while some firms have also furloughed staff.

Asian chipmakers are rushing to expand their production capacity to appease the global shortage, but firms warn it may take months to plug the supply gap as they struggle to keep up with strong demand.

Meanwhile, China’s new bank loans leapt to new highs in January boosted by seasonal demand, while broad credit growth slowed, as the central bank walks a tightrope between supporting a recovering economy and rising debt risks.

Banks extended 3.58 trillion yuan ($555.31 billion) in new loans in January, hitting the highest on record and topping the 3.34 trillion yuan seen in January 2020, data from the People’s Bank of China (PBOC) showed on Tuesday.

Chinese lenders tend to front-load loans at the beginning of the year to get higher-quality customers and win market share.

Analysts polled by Reuters had predicted new yuan loans would jump to 3.5 trillion yuan in January, up from 1.26 trillion yuan the previous month. Capital Economics said it would make more sense to focus on outstanding lending growth to gauge the underlying trend, as January’s new lending figures are usually the highest of the year.

“Credit growth in China dropped back further last month due to a broad-based slowdown in both bank and non-bank lending,” it said in a research note.

“Credit is likely to continue decelerating as the PBOC focuses on reining in financial risks. This will become a growing headwind to the economy in the second half of the year.”