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China's new yuan lending surges in March

Updated: 2012-04-12 17:10


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BEIJING - China's new yuan loans trumped forecasts to soar to a 14-month high of 1.01 trillion yuan ($160.18 billion) in March, as the government shifted more focus to sustaining growth in the world's second-largest economy.

The figure, up 332 billion yuan compared with a year earlier, also jumped from 710.7 billion yuan in February this year and 738 billion yuan in January, the People's Bank of China said Thursday.

The higher-than-forecasted lending in March signals a loan demand rebound after reserve requirement ratio cuts in February, said Zeng Gang, a financial researcher at the Chinese Academy of Social Sciences, a government think tank.

It also indicates that the central bank is easing restrictions on lending capacity at financial institutions in an effort to buoy the economy, Zeng said.

The country's financial institutions issued a total of 2.46 trillion yuan in new loans in the first three months, slightly higher than the 2.24 trillion yuan issued during the same period last year.

The M2, a broad measure of money supply that covers cash in circulation and all deposits, grew 13.4 percent year-on-year to hit 89.56 trillion yuan at the end of March. The increase was lower than the 14-percent annual target that the government set in early March.

Preliminary data showed the country's social financing, a measure of funds raised by entities in the real economy, totaled 1.86 trillion yuan last month, soaring 78.23 percent from February, the central bank said.

First-quarter social financing stood at 3.88 trillion yuan, or 348.7 billion yuan less than the same period last year, it said.

By the end of March, the country's foreign exchange reserves, which are the world's largest, hit $3.31 trillion, compared with $3.18 trillion at the end of December.

Lu Zhengwei, chief economist of the Industrial Bank, said the strong new loan figure in March, which might not be maintained in the second quarter, will help cushion a slowdown in the national economy.

The World Bank cut its forecast for China's 2012 economic growth to 8.2 percent on Thursday from 8.4 percent. The revision comes ahead of China's official first-quarter growth report due to be released Friday, which is widely expected to be lower than 8.5 percent and the lowest in 11 quarters.

China's economic growth slowed throughout all of 2011, from 9.7 percent in the first quarter to 8.9 percent in the last quarter.

Analysts expected the Chinese government to focus more on pro-growth policies as economic growth slowed, inflation concerns eased and a credit crunch spread among small companies that generate more than half of China's jobs.

The country's inflation rose a more-than-expected 3.6 percent in March from a year ago as food price rises accelerated. Although picking up from February's 3.2-percent rise, the growth was still lower than the government's inflation control target of 4 percent for this year.

In the first-quarter monetary policy report, the central bank said it will balance efforts to ensure stable and relatively fast economic growth, maintain the overall stability of prices and prevent financial risks.

It will ensure a reasonable level of social financing as it maintains a prudent monetary policy this year.

The central bank in February lowered the reserve requirement ratio for banks by 50 basis points, the second cut in three months, to ease the short-term credit crunch.

Peng Wensheng, chief economist at the China International Capital Corp, said there is big chance that the central bank will lower the reserve requirement ratio again in April.