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December 8, 2009

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New yuan loans seen to slow next year

THE amount of new yuan loans is expected to slow to 8 trillion yuan (US$1.17 trillion) in 2010 from this year's projected 9.5 trillion yuan as China maintains its moderately loose monetary policy, economists said yesterday.

They said China's loan growth next year is unlikely to shrink sharply though this year's rise is deemed as unsustainable.

"The real challenge of 2010 is to ensure a soft landing for the rapid growth of loans," said Cheng Manjiang, a BOC International analyst.

BOC International, a Bank of China securities affiliate, said in a note that it expects China's new yuan-backed loans to grow to 8 trillion yuan in 2010 as China seeks to consolidate economic growth as its top priority.

China's top leaders pledged to maintain the relatively loose monetary stance and proactive fiscal policy next year to consolidate economic growth, according to the three-day central economic work conference which ended yesterday. The annual meeting sets China's macroeconomic policies.

In the first 10 months of this year, banks in China have lent 8.92 trillion yuan of local-currency loans, up 5.26 trillion yuan from a year ago. The figure already surpassed the 5 trillion yuan target for 2009 set at the beginning of this year. Economists said they expected total new yuan growth to top 9.5 trillion yuan. For next year, they are widely expecting a supply growth of 17 percent to 18 percent and for new yuan loans to ease to 7 trillion yuan to 8 trillion yuan.

He Zhenhua, a Shenyin & Wanguo Securities Co analyst, said he also expects next year's new loans to top 8 trillion yuan on strong demand from the private sector.


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