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Analyst: new loans to top 10 trln yuan in 2009
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15:28, August 12, 2009

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Central bank: new loans slowdown reasonable

Pan Xiangdong, chief macroeconomic analyst at Everbright Securities, recently predicted that the amount of new loans to be granted in the second half of 2009 will be much smaller compared with that of the first half this year. Monthly average for new loans may stand at 300 to 500 billion yuan in the second half. It is estimated that new loans in the whole 2009 may be around 10 trillion yuan.

Industry insiders say that the slowdown in new loans won't affect economy growth. Large-scale enterprises won't face tight cash flow problems in the second half this year. Meanwhile, they can have direct financing channels including short-term corporate bond, medium-term note and enterprise bonds.

Banks will further promote lending restructuring and issue more loans to small and medium-sized enterprises (SMEs). Microscopic economic bodies' demand for new loans will therefore be satisfied.

Pan noted that although new loans dropped in July, monetary velocity will increase with the rebound of China's economy. The fact that the public favors demand savings more and the increasing M1 (narrow measure of money supply) are both signs of growing money velocity.

"Generally speaking, market liquidity will be sufficient and there is nothging to worry that the real economy may lack funding support," Pan said.

By People's Daily Online


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