China New Yuan Lending Exceeds Forecast
2012-01-09 11:35:52
Chinese new yuan loans increased more than expected at the end of last year, signaling easing credit conditions even as the central bank prepares to shield the economy from the impact of the global economic slowdown.
Chinese banks extended CNY 640.5 billion in new loans in December, up from CNY 562.2 billion in November, data from the People's Bank of China (PBoC) showed Monday. Economists were expecting an increase to CNY 575 billion.
The central bank data also showed that M2, a measure of money supply, amounted to CNY 85.16 trillion in December, 13.6 percent higher than last year. Economists expected the rate of growth in M2 to be 12.9 percent compared to 12.7 percent rise in November.
The narrow measure of money supply (M1), which covers cash in circulation plus demand deposits, increased 7.9 percent annually to CNY 28.98 trillion in December.
For the year 2011, lending in new yuan totaled CNY 7.47 trillion, which was CNY 390.1 billion less than 2010, according to the central bank report. New yuan-denominated deposits in 2011 amounted to CNY 9.63 trillion, a decrease of CNY 2.29 trillion yuan compared to that in 2010. In 2011, the cross-border settlement of trade deals in yuan amounted to CNY 2.08 trillion, the central bank said.
The stronger than forecast lending figures suggests a relaxation in monetary conditions as Beijing moved on pro-growth policies, shifting its focus from price stability.
In December, PBoC slashed the banks' reserve requirements by half a percentage point for the first time in three years as the economic growth slowed to the weakest in 2 years in the third quarter.
In an interview with Xinhua on Sunday, PBoC governor Zhou Xiaochuan said that China must brace itself for spillovers from the European debt crisis and a slowdown in global economic growth in 2012 despite a positive outlook for the domestic economy.
He urged the government to be ready to pick appropriate policy instruments to combat external shocks at any time. According to Zhou, risks from local government debts and property loans are controllable, and the slowdown in price rises makes anti-inflation efforts not as urgent as in early 2011.
The official also noted that it was not a very good time to push forward market-oriented interest rates, but the Renminbi's floating band could be widened when the country's capital inflows and outflows are more balanced.