China’s Loan Prime Rate Remains Unchanged for 16th Consecutive Month

The benchmark rate for the Chinese banking sector has held steady for the 16th consecutive month in the month of August. 

The LPR’s is­sued by Chi­na’s Na­tional In­ter­bank Fund­ing Cen­ter (全国银行间同业拆借中心) on 20 August were 3.85% for the one year LPR and 4.65% for the five year LPR – the same as the readings for the preceding month. 

Chi­na’s LPR’s have re­mained at the same level since April 2020, when the one year LPR fell by 20 ba­sis points com­pared to the March read­ing of 4.05%, and the five year LPR fell by 10 ba­sis points from 4.75%. 

Zhou Maohua (周茂华), analyst from China Everbright Bank, said to the Chinese central bank’s official news outlet that China’s monetary and lending environment had remained “rationally moderate” in July given total social financing and M2 money supply growth.

“Looking at domestic and external economic conditions in the second half, moderate deployment of active fiscal policy is needed, and the central bank will provide targeted support to difficulties in the real economy, stimulating the activity of micro-actors.

“Keeping the LPR steady helps to stabilise market expectations.”

The LPR in China is the lend­ing rate pro­vided by com­mer­cial banks to their high­est qual­ity cus­tomers, and serves as the bench­mark for rates pro­vided for other loans.

The Na­tional In­ter­bank Fund­ing Cen­ter serves as the des­ig­nated pub­lisher of the LPR, and re­leases the fig­ures at 9:30 am on the 20th of each month, af­ter first col­lect­ing quotes from the group of re­port­ing banks and cal­cu­lat­ing the av­er­age of these quotes fol­low­ing ex­clu­sion of the low­est and high­est quotes.

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