Bank lending falls on tighter controls
By Zhang Fengming |
June 12, 2010, Saturday
|
Print Edition
Print Edition
China's new yuan credit fell in May, according to central bank data yesterday.
Banks in China extended 639.4 billion yuan (US$93.6 billion) of new yuan loans last month, down from April's 774 billion yuan, the People's Bank of China said on its Website.
That compared with the median forecast of 600 billion yuan in a Bloomberg News survey of 24 economists.
M2, the broadest measure of money supply including cash and deposits, grew 21 percent from a year earlier, down from April's 21.5 percent. The economists' median forecast was 21 percent.
"Strong economy growth, accelerating inflation and fears of a bad loan problem down the road have prompted authorities to tighten monetary policy, though moves thus far have been minor," said Nikhilesh Bahattacharyya, a Moody's Economy.com analyst.
Monetary growth has decelerated since November as bank lending has grown at a slower pace in line with a gradual tightening of monetary policy. China has targeted a money supply growth of 17 percent this year and new credit of 7.5 trillion yuan.
Its official monetary stance is still "appropriately loose" but tightening moves have already been rolled out to cool off the housing market and stave off overheating concerns.
"To minimize the risk of a bad loan problem and reduce inflation pressures, Chinese authorities will continue to slow credit creation and monetary growth over the course of the year," he said.
Banks in China issued a record 9.6 trillion yuan of new credit in 2009 amid a stimulus package against the global financial crisis.
Meanwhile, China's inflation rose to a 19-month high of 3.1 percent in May. China is targeting to contain inflation within 3 percent this year.
"Inflation is likely to start to slow after peaking in June or July at near 4 percent as the negative base effect kicks in," Standard Chartered Bank economist Li Wei said. "We expect no interest hikes in China this year."
On the exchange rate side, economists said the strong growth in exports in May and a rebound in trade surplus likely support calls for a change in the exchange rate policy -- the reform?will likely be more about increasing flexibility than appreciation.
Banks in China extended 639.4 billion yuan (US$93.6 billion) of new yuan loans last month, down from April's 774 billion yuan, the People's Bank of China said on its Website.
That compared with the median forecast of 600 billion yuan in a Bloomberg News survey of 24 economists.
M2, the broadest measure of money supply including cash and deposits, grew 21 percent from a year earlier, down from April's 21.5 percent. The economists' median forecast was 21 percent.
"Strong economy growth, accelerating inflation and fears of a bad loan problem down the road have prompted authorities to tighten monetary policy, though moves thus far have been minor," said Nikhilesh Bahattacharyya, a Moody's Economy.com analyst.
Monetary growth has decelerated since November as bank lending has grown at a slower pace in line with a gradual tightening of monetary policy. China has targeted a money supply growth of 17 percent this year and new credit of 7.5 trillion yuan.
Its official monetary stance is still "appropriately loose" but tightening moves have already been rolled out to cool off the housing market and stave off overheating concerns.
"To minimize the risk of a bad loan problem and reduce inflation pressures, Chinese authorities will continue to slow credit creation and monetary growth over the course of the year," he said.
Banks in China issued a record 9.6 trillion yuan of new credit in 2009 amid a stimulus package against the global financial crisis.
Meanwhile, China's inflation rose to a 19-month high of 3.1 percent in May. China is targeting to contain inflation within 3 percent this year.
"Inflation is likely to start to slow after peaking in June or July at near 4 percent as the negative base effect kicks in," Standard Chartered Bank economist Li Wei said. "We expect no interest hikes in China this year."
On the exchange rate side, economists said the strong growth in exports in May and a rebound in trade surplus likely support calls for a change in the exchange rate policy -- the reform?will likely be more about increasing flexibility than appreciation.
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