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China's new loans rise to 516.7 bln yuan in Sept.
2009/10/14

  

    China's new yuan-denominated loans in September rose to 516.7 billion yuan (75.68 billion U.S. dollars) from August's 410.4 billion yuan, the People's Bank of China, the central bank, said Wednesday, Oct. 14.

    New yuan-denominated loans in the first nine months stood at 8.67 trillion yuan, 5.19 trillion yuan more than the same period last year.

    China's foreign exchange reserve hit a new high of 2.2726 trillion U.S. dollars at the end of September, according to the central bank.

    China's monthly new loans had slowed from June's high of 1.53 trillion yuan to 355.9 billion yuan in July as a result of bank contracting credit and the central bank's open market operations. The figure rose to 410.4 billion yuan in August and then to September's 516.7 billion yuan.

    The broad measure of money supply, M2, which covers cash in circulation and all deposits, was up 29.31 percent from a year earlier to 58.54 trillion yuan at the end of September.

    The narrow measure of money supply, M1 (cash in circulation plus current corporate deposits), was up 29.51 percent to 20.17 trillion yuan.

    CONTINUED PROACTIVE POLICY

    Both figures added to the view that the world's third largest economy was on track for recovery based on a moderately easy monetary policy, said Ding Zhijie, deputy director of the School of Banking and Finance of the University of International Business and Economics.

    Ding said the figures of money supply was sufficient to meet the demands of economic growth for the following months of the year and a moderately easy monetary policy would be maintained as the economic rebound is yet to be stable, firm and balanced.

    Liu Yuhui, a researcher with the Institute of Finance and Banking of the Chinese Academy of Social Sciences (CASS), predicted that there would not be obvious contraction of new loans in the fourth quarter as investment of local governments would not drop sharply driven by the huge investment of the central government.

    Chinese Finance Minister Xie Xuren said last week that China would continue to implement the proactive fiscal policy and moderately easy monetary policy to support growth in a speech to the plenary session of the International Monetary Fund (IMF) and the World Bank annual meetings held in Istanbul, Turkey.

STRONG ECONOMIC RECOVERY REMAINS

    Lian Ping, chief economist of the Bank of Communications, said that the speeding up of money circulation shows that the efficiency of capital use is improving and the economy is becoming more active.

    With many infrastructure construction projects being launched, huge loans lent in the first half has taken effects on the micro-economy of the later half and next year, he said.

    The National Bureau of Statistics (NBS) said Tuesday that China's business climate index, a main gauge of the country's macro-economic outlook, rose by 8.5 points in the third quarter from the previous quarter.

    NBS is expected to release economic data of the world third largest economy next week.

    FOREX RESERVE GROWS

    The central bank data also showed that China's foreign exchange reserve hit a new high of 2.27 trillion U.S. dollars by the end of September, up 19.26 percent year on year, as the third quarter saw an influx of 141 billion U.S. dollars.

    The growth picked up speed in the second quarter, with 178 billion U.S. dollars added, ending the decline in the first two months when monthly exports tumbled to near a decade low.

    The speeding up of the added forex reserve is a result of the slowdown in foreign trade decline, said Hu Zhihao, a researcher with the Institute of Finance and Banking of the CASS.

    The General Administration of Customs announced Wednesday that the total value of imports and exports for September totaled 218.94 billion U.S. dollars, down 10.1 percent from the same month last year, but an increase of 14.2 percent from August.

    According to Wang Qing, chief economist of Morgan Stanley, part of the reserve accumulation was attributable to the increase in investment values in terms of the U.S. dollars due to the appreciation of the euro and yen against the U.S. dollar, as well as mild inflow of "hot money" in the third quarter.

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