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Credit goal to support expansion

CHINA targets a credit growth of more than 5 trillion yuan (US$732 billion) this year in a bid to shore up economic growth, Premier Wen Jiabao said yesterday.

The credit target is even higher than the two-year 4-trillion-yuan stimulus package announced in November.

The credit growth is needed to back the economy and improve credit structure. China has opted for a "moderately easing" monetary policy and is eying a 17-percent growth in M2, the broadest measure of money supply, this year.

"The 5-trillion-yuan credit target doesn't come as a surprise at all," said She Minhua, a China Securities Co analyst yesterday. "Banks have already issued half of the whole-year credit in the first two months."

Financial institutions in China extended 1.62 trillion yuan of new yuan loans in January. At the same time, M2, including deposits and cash, climbed 18.8 percent from a year earlier, beating the central government's 17-percent annual target.

Wen reiterated the government will curb credit to high pollution and high-energy consumption industries.

Besides the shift in monetary policy China has scrapped a lending quota since November to thaw liquidity. Banks are encouraged to grant loans to help revive the economy as China is the only major economy that has not contracted sharply in the global economic turmoil.

The February credit data is due to be released next week but analysts said they expected around 1 trillion yuan in new lending. The flow of loans is widely welcomed amid a global credit crunch.

Su Ning, vice governor of the People's Bank of China, was quoted on Wednesday as saying he saw no risks in the rise in new lending this year.


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