China's bank loans rise in May as gov't moves to bolster economy

Tuesday, June 12, 2012

SHANGHAI,-- China's bank lending rose in May compared to the previous month, official figures showed Monday, as the government implemented a range of measures to boost the nation's slowing economy.

Banks issued 793.2 billion yuan (US$125 billion) in new loans in May, up from 681.8 billion yuan in April, the nation's central bank said in a statement.

The latest figure beat market expectations of 750 billion yuan, according to a poll of economists by Dow Jones Newswires.

“The figure is higher than expected,” Zhang Zhiwei, chief China economist at Nomura Securities in Hong Kong, told AFP.

“This is good news, indicating that China's policy easing is in progress and is coming in at a slightly faster than expected pace.”

On a year-on-year basis, new loans increased by 241.6 billion yuan in May from the same month last year, the People's Bank of China said.

The increase in new lending came as the central bank cut banks' reserve requirements — the proportion of funds banks must place in reserve — last month for the third time since December last year.

Analysts said the May reserve requirement cut would help pump an additional 400 billion yuan of liquidity into the economy.

China last week also cut interest rates for the first time in more than three years, amid worries over the deteriorating economy.

China's economy grew 8.1 percent in the first quarter of 2012 — its slowest pace in nearly three years.

The government has reduced its economic growth target for this year to just 7.5 percent, down from actual growth of 9.2 percent last year and 10.4 percent in 2010.

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