China's May new lending drops to $93.6b

Updated: 2010-06-11 10:47
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BEIJING: China's new yuan-dominated lending in May shrank to 639.4 billion yuan ($93.6 billion) from 774 billion yuan in April, the People's Bank of China (PBOC), the central bank, said in a statement Friday.

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China's broad money supply (M2), which covers cash in circulation and all deposits, increased 21 percent year-on-year to 66.34 trillion yuan by the end of May, according to the PBOC statement on its website.

The narrow measure of money supply (M1), cash in circulation plus current corporate deposits, climbed 29.9 percent from a year earlier to 23.65 trillion yuan by the end of May.

Analysts attributed the decline in new lending to waning market demand from the property sector and industries with excessive output capacity as a result of government moves to tighten monetary policy.

The May figure was in line with market expectations, said E Yongjian, an analyst with Shanghai-based Bank of Communications, China's fifth largest lender.

"Due to the government's measures since this April to cool the real estate market, home trading volume and mortgage loans declined nationwide," he said.

The May figure brought new loans in the first five months to more than 4 trillion yuan, surpassing half the total 7.5 trillion yuan China has targeted for the full year.