China lending 'sustainable': central bank

"I think overall, the situation will converge to a sustainable level," Deputy Central Bank Governor Yi told Bloomberg News on Oct. 3 in Istanbul, where the World Bank and International Monetary Fund are having their annual meetings. "In August, it was already not too much. June and August were pretty flat."

Chinese officials including Yi and Finance Minister Xie Xuren met in Istanbul with other Group of 20 officials amid pledges to help shore up the world economy's recovery from the deepest recession since World War II. French Finance Minister Christine Lagarde expressed optimism after weekend meetings that China will play its part in rebalancing global growth.

"This is the first time I've heard the Chinese" expressly indicate their growth forecasts and plans for domestic demand, she said Sunday. It was "very precise language" that, if followed, will help "address global imbalances" and "have consequences on exchange rates."

As global trade flows declined, China suffered a 10-month slide in exports, damping growth in the region and pulling the nationwide expansion rate down to 6.1 percent in the first quarter, the slowest pace in almost a decade.

The government is using its 4 trillion yuan (US$586 billion) stimulus and record bank lending to build railways, roads and power plants, mostly in the less-developed west and center of the country.

"The Chinese are masterful at entry and exit," said Goldman Sachs Group Inc. Chief Economist Jim O'Neill in an interview, adding he expects lending to slow in coming months.

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