China's new bank loans may exceed 7.5 trillion yuan in 2010

The uncertainty in China's economy in the second half of 2010 will lead to the uncertainty of credit expansion. Therefore, it is possible for bank credit to exceed 7.5 trillion yuan in 2010, according to a research report from the Finance Research Center under the Bank of Communications on July 26.

The report said that although credit demand dropped under the influence of several factors, such as the drop in housing trade volume along with loan limitations on local governments' financing platforms and industries with overcapacity, new loans issued in 2010 will continue to see growth. This is largely due to the steady progress of projects under construction, the expansion of low-income housing, increased investment in western development and the continued need to support and encourage private investment

Therefore, new loans may even reach 8 trillion yuan in 2010. The report predicts that by the end of 2010, M2, the indicator of broad money supply, will increase 17 percent to 19 percent and M1, which represents narrow money supply, will increase 20 percent to 22 percent.

According to the report, commercial banks' credit structure will be optimized in the second half of 2010. Judging from the term structure, as the credit demand will drop and the demand among enterprises for short-term liquidity will recover in the second half of 2010, bill financing and short-term loans are expected to maintain a slight increase and the long-term credit will make up a smaller portion of outstanding loans.

By People's Daily Online