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October 31, 2009

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Home » Business » Economy

PBOC sees rise in loans, prices

DEMAND for bank loans in China is predicted to increase steadily, and consumer prices will continue to rebound in the fourth quarter, the central bank said yesterday.

The expected credit surge is due to hefty capital demand for a number of under-construction projects, and reheating of the real estate sector, the quarterly macro-economic review issued by the People's Bank of China said. Medium- and long-term credit will rise "substantially," and the bill-financing, which facilitates short-term credits, will continue to fall after the central bank tightened rules to ensure the money flows into the real economy and not into stock market speculation, the report said.

Chinese banks extended 8.67 trillion yuan (US$1.23 trillion) of loans in the first nine months, 5.19 trillion yuan more than the same period a year ago, to echo the government's 4-trillion-yuan stimulus package.

The central bank also forecast the Consumer Price Index would start to rise after hitting the bottom at the end of this year. "The CPI will stay negative in the last three months, but with slowing monthly declines," said the report.


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