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New credit hits $234b in January

By Qiang Xiaoji (chinadaily.com.cn)
Updated: 2010-02-01 17:46

New yuan-denominated loans extended by China's domestic banks in 2010 almost hit 1.6 trillion yuan ($234.36 billion) in January, catching up with the amount of the same period last year, but economists did not expect interest rate increase in the near future, the Economic Information Daily reported today.

Economists said whilst measures like open market operations and window guidance would be enough for the People's Bank of China (PBOC), the central bank, to curb robust credit expansion. As the PBOC has already raised the deposit reserve ratio by 0.5 percent in January to rein in the aggressive bank lending, thus it will unlikely raise the interest rate in the first half of this year, the report said.

New yuan-denominated loans in China amounted to 9.59 trillion yuan in 2009, which has assured the GDP growth in 2009 to exceed its target of 8 percent but also triggered worries over inflation and economic bubbles. As the central bank began to show signals of a tightening monetary policy, banks rushed to extend more loans at the beginning of this year, trying to get a larger share in the 7.5 trillion yuan credit growth cap set for 2010, industry insiders said.