New bank loans in China jumped more than expected to a record 4.9 trillion yuan ($720.2 billion) in January as the central bank looks to kickstart a recovery in the world’s second-biggest economy after the lifting of harsh pandemic controls.

, one of its worst rates in nearly half a century.

January’s new loans more than tripled December’s tally and exceeded analysts’ expectations, according to data released by the People’s Bank of China (PBOC).

Analysts polled by Reuters had predicted new yuan loans would jump to 4 trillion yuan in January, from 1.4 trillion yuan in December and above the previous monthly record of 3.98 trillion yuan in January 2022.

Chinese banks tend to issue more loans at the beginning of the year to gain higher-quality customers and win market share, but the size of the increase spurred hopes that business and consumer confidence is improving rapidly after the anti-COVID curbs were suddenly lifted in December.

“China’s credit data came in stronger than expected, suggesting that the credit support remains strong at the beginning of the year,” Zhou Hao, chief economist at Guotai Junan International, said in a note.

“Overall, this is a positive credit report, and is likely to help the economy to rebound significantly in the first quarter of 2023. The next focus for the markets will be property sales, which are highly correlated to bank credit.”

Analysts believe improved credit conditions, along with robust infrastructure spending and supportive policy measures, could boost economic growth to about 5 per cent this year, even with a weaker global backdrop.

But they warn the recovery momentum could be uneven, requiring policy to remain supportive for some time.

Other data released on Friday showed China’s January factory gate prices fell more than expected, suggesting that manufacturers are not yet running at full speed even after the end of the zero-COVID policy, while a car industry association said vehicle sales slumped 35 per cent from a year earlier.

“Banks were under pressure to gear up loan issuance from the fourth quarter last year under policy guidance to boost credit supply. But actual demand is weak,” said one person at a state-owned bank, who declined to be identified.

Manufacturing firms’ appetite for more credit remained soft since they took on so many loans last year, he added.

Household loans, mostly mortgages, rose to 257.2 billion yuan in January from 175.3 billion yuan in December, while corporate loans soared to 4.68 trillion yuan from 1.26 trillion yuan.

The divergence between corporate and household loans underlined a faster recovery in corporate credit while the high jobless rate weighed on household confidence, said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

China’s new household deposits rose to 6.2 trillion yuan in January from 2.88 trillion yuan in December. Analysts are closely watching that figure for signs that shell-shocked consumers are spending again after a year of lockdowns and job losses battered sentiment.

Other key credit gauges also showed encouraging gains. Broad M2 money supply in January grew 12.6 per cent from a year earlier - the fastest pace since April 2016 and above estimates of 11.6 per cent forecast in the Reuters poll. It rose 11.8 per cent in December.

Outstanding yuan loans grew 11.3 per cent from a year earlier compared with 11.1 per cent growth in December. Analysts had expected 11.0 per cent growth.

The central bank (CB) has promised to make its policy “precise and forceful” this year to support the economy, keeping liquidity reasonably ample and lowering funding costs for businesses.

Analysts polled by Reuters expect the central bank to cut the benchmark lending rate - the one-year loan prime rate (LPR) - by another 5 basis points (bps) in the first quarter, and it is expected to offer more targeted support measures for sectors which are struggling the most.

Some analysts are also expecting more cuts in banks’ reserve ratios (RRR) this year after two reductions last year, the latest in December.

Year-on-year growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, eased to 9.4 per cent in January -- the slowest pace since January 2017 -- from 9.6 per cent in December.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales. Corporate and government bond issuance picked up last month, some market watchers said.

In January, TSF jumped to 5.98 trillion yuan from 1.31 trillion yuan in December. Analysts polled by Reuters had expected 5.40 trillion yuan.