Loan target seen to be broken
By Wang Yanlin |
December 11, 2010, Saturday
|
Print Edition
Print Edition
BANKS in China are set to surpass the government's loan target of 7.5 trillion yuan (US$1.13 trillion) this year as they have already extended 7.4 trillion yuan in the first 11 months of 2010, according to the People's Bank of China.
They lent 564 billion yuan in new yuan credit in November, the central bank said yesterday on its website.
M2, the broadest measure of money supply, grew 19.5 percent from a year earlier in November, compared with a 19.3 percent rise in October.
China may set the loan target next year at 7 trillion yuan, according to earlier reports.
The country announced a prudent monetary policy stance on December 3. The shift from a relatively loose monetary policy is to tame China's surging inflation rate. In October, China's Consumer Price Index, a major inflation gauge, rose 4.4 percent year on year to a 25-month high.
The National Bureau of Statistics is due to release the CPI and other key economic data today, and market projections are pointing to an inflation rate of 4.8 percent - another high. It has triggered speculation for another interest-rate increase.
But Wang Qing, an economist at Morgan Stanley, argued China may not sacrifice growth to curb price rises, and new yuan loans therefore won't drop dramatically between now and the year-end.
"If the government expects to meet this year's target of 7.5 trillion yuan, monthly new loans have to fall below 300 billion yuan in November and December," Wang said. "But we believe this won't occur."
He sees November's 564 billion yuan loans as reasonable and expects 400 billion yuan to be extended in December, driving annual new lending to 7.8 trillion yuan this year.
The central bank yesterday announced the third increase in five weeks in the reserve requirement ratio for commercial banks. China already raised the key interest rate in October.
They lent 564 billion yuan in new yuan credit in November, the central bank said yesterday on its website.
M2, the broadest measure of money supply, grew 19.5 percent from a year earlier in November, compared with a 19.3 percent rise in October.
China may set the loan target next year at 7 trillion yuan, according to earlier reports.
The country announced a prudent monetary policy stance on December 3. The shift from a relatively loose monetary policy is to tame China's surging inflation rate. In October, China's Consumer Price Index, a major inflation gauge, rose 4.4 percent year on year to a 25-month high.
The National Bureau of Statistics is due to release the CPI and other key economic data today, and market projections are pointing to an inflation rate of 4.8 percent - another high. It has triggered speculation for another interest-rate increase.
But Wang Qing, an economist at Morgan Stanley, argued China may not sacrifice growth to curb price rises, and new yuan loans therefore won't drop dramatically between now and the year-end.
"If the government expects to meet this year's target of 7.5 trillion yuan, monthly new loans have to fall below 300 billion yuan in November and December," Wang said. "But we believe this won't occur."
He sees November's 564 billion yuan loans as reasonable and expects 400 billion yuan to be extended in December, driving annual new lending to 7.8 trillion yuan this year.
The central bank yesterday announced the third increase in five weeks in the reserve requirement ratio for commercial banks. China already raised the key interest rate in October.
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