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Yuan lending soars in June

NEW yuan-backed loans more than doubled in June to 1.53 trillion yuan (US$224 billion) from May's 591.8 billion yuan, the central bank said yesterday.

New yuan deposits last month totaled 2 trillion yuan, the People's Bank of China said yesterday on its Website, citing preliminary figures.

It's rare for the central bank to give preliminary figures. In most cases, it cites a full range of monetary figures including the money supply growth.

The June figure is close to the loan growth in the first quarter, when monthly average topped 1.6 trillion yuan.

In total, banks in China have granted new yuan loans of 7.37 trillion yuan in the first half, already surpassing the bottom of the central government's "at least 5 trillion yuan" target for this year.

The rapid loan growth has pushed economists to raise their projections of China's economy growth as the loans are expected to shore up economy.

Banking authorities have urged lenders to be careful of the risks.

The surge of bank loans has some analysts worrying about a return to the past, when Chinese banks went on a lending spree to often less creditworthy state companies, only to get saddled with a mountain of bad debt that forced the government to bail out its biggest lenders with billions of US dollars ahead of their initial public offerings.

Yuwa Hedrick Wong, economic adviser of MasterCard Worldwide, said the rapid loan growth may cause more bad loans but the situation is unlikely to be as worse as in the 1990s.

The state-owned companies are better managed now, he said.

China had shifted to an easing monetary policy in November, including lifting lending quotas, cutting interest rates and reserve requirement to encourage lending to shore up economy.


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