BOFIT Viikkokatsaus / BOFIT Weekly 2018/04

The PBoC'sslight tightening of monetary policy during 2017 was reflected in interbank market as higher SHIBOR rates and demands for higher yields on new issues of government and corporate bonds. The interest rate on China's 10-year government bond rose by nearly 100 basis points last year to 3.9 %. The yield on corporate bonds rose even more last year. Higher financing costs were also reflected in the price of bank loans in the first three quarters of 2017. As of end-September, the nominal rate on the average bank loan was 5.8 %, while apartment loans were slightly cheaper (5 %). Both average rates were about 50 basis points higher than a year earlier. Respective real interest rates (4.2 % and 3.4 %) rose even more due to modest inflation. Even so, they were considerably lower than at the beginning of 2015.