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January 16, 2010

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Home » Business » Economy

Forex reserves hit record

China's foreign currency reserves surged to a record in December and new yuan loans rose beyond forecasts.

China's forex reserves grew 23.3 percent to US$2.4 trillion as the world's largest at the end of December, the People's Bank of China said yesterday on its Website.

Banks in China extended 379.8 billion yuan (US$55.6 billion) of new yuan-backed loans in December, pushing the year's total to 9.59 trillion yuan, the central bank said.

The figure compared with the 5-trillion-yuan annual target the government set at the beginning of 2009.

At the end of December, outstanding loans by financial institutions stood at 39.97 trillion yuan, up 31.74 percent year on year, the central bank said.

The December statistics suggested that China's credit rise was returning to a reasonable growth, Liu Yuhui, an economist with the Chinese Academy of Social Sciences, told Xinhua news agency.

The new lending was more than the 310-billion yuan median estimate made in a Bloomberg News survey and higher than in the previous two months.

China's M2, the broadest measure of money supply, jumped 27.7 percent in December from a year earlier, after a record 29.7 percent rise in November.

"The central government has already taken measures to curb the massive liquidity, as several measures were taken this month," said Lu Zhengwei, an Industrial Bank senior economist.

On Tuesday, the central bank asked banks to freeze more money from lending for the first time in 19 months. That followed two interest rate hikes on central bank bills in a week.


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