New yuan loans to pass goal
By Zhang Fengming |
October 14, 2010, Thursday
|
Print Edition
Print Edition
NEW bank lending in China is expected to exceed the target set for this year as new yuan loans grew faster than expected in September, while the country's foreign exchange reserves hit a record US$2.65 trillion, central bank data showed yesterday.
Banks in China extended 595.5 billion yuan (US$89 billion) of new yuan loans in September, up from August's 545.2 billion yuan, the People's Bank of China said on its website yesterday. Economists have widely expected new credit of 500 billion yuan in September.
China's forex reserves rose a more-than-expected US$194 billion in the third quarter, a sharp jump from a US$7.2 billion gain in the previous quarter.
Meanwhile M2, the broadest measure of money supply including cash and deposit, expanded by an annual 19 percent, above the 17 percent growth target this year.
"The data confirm our view that M2 growth in July was the trough and new bank lending for this year will exceed the 7.5 trillion yuan target by a meaningful margin," said Wang Qing, a Morgan Stanley economist.
Wang said new yuan loans are likely to be close to 8 trillion yuan this year and it's unlikely that there will be an interest rate hike this year. Banks extended 6.3 trillion yuan in new loans in the first three quarters.
China has unveiled quantitative measures to soak up excess liquidity.
On Monday, the central bank temporarily raised the reserve requirement ratio for six major banks - Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank, China Merchants Bank and China Minsheng Bank - by 50 basis points to 17.5 percent for the next two months. This step is estimated to drain about 180 billion yuan from the market.
On the yuan, PBOC Governor Zhou Xiaochuan said last week that China needed to avoid the "shock therapy" of an excessive appreciation, defying demands by Western nations' for a sharp revaluation of the currency.
Banks in China extended 595.5 billion yuan (US$89 billion) of new yuan loans in September, up from August's 545.2 billion yuan, the People's Bank of China said on its website yesterday. Economists have widely expected new credit of 500 billion yuan in September.
China's forex reserves rose a more-than-expected US$194 billion in the third quarter, a sharp jump from a US$7.2 billion gain in the previous quarter.
Meanwhile M2, the broadest measure of money supply including cash and deposit, expanded by an annual 19 percent, above the 17 percent growth target this year.
"The data confirm our view that M2 growth in July was the trough and new bank lending for this year will exceed the 7.5 trillion yuan target by a meaningful margin," said Wang Qing, a Morgan Stanley economist.
Wang said new yuan loans are likely to be close to 8 trillion yuan this year and it's unlikely that there will be an interest rate hike this year. Banks extended 6.3 trillion yuan in new loans in the first three quarters.
China has unveiled quantitative measures to soak up excess liquidity.
On Monday, the central bank temporarily raised the reserve requirement ratio for six major banks - Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank, China Merchants Bank and China Minsheng Bank - by 50 basis points to 17.5 percent for the next two months. This step is estimated to drain about 180 billion yuan from the market.
On the yuan, PBOC Governor Zhou Xiaochuan said last week that China needed to avoid the "shock therapy" of an excessive appreciation, defying demands by Western nations' for a sharp revaluation of the currency.
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