New loans estimated to top 500 billion yuan in November

15:52, November 29, 2010      

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Several institutions have estimated that the loans in November will perhaps top 500 billion yuan, indicating a high possibility that this year's actual new loan scale will likely exceed the target set by the government.

New loans stood as high as 588 billion yuan in October, far higher than market expectations. This increased the total new loans for the first 10 months of 2010 to 6.9 trillion yuan, only 600 billion yuan less than the annual new loan target.

During a recent monetary credit work forum, Hu Xiaolian, deputy governor of the People's Bank of China (PBOC) required banking financial institutions to take effective measures to control the pace and amount of lending over the last two months of 2010 and enable their total amount of loans to be in line with the macroeconomic regulation polices.

Experts believe that if the central bank returns once again to a more prudent monetary policy, the economic growth rate target for 2011 will still be set at about 8 percent, the broad monetary supply (M2) growth rate target will likely be set at 16 to 17 percent and the new loans target at less than this year's target of 7.5 trillion yuan.

Li Lihui, head of the Bank of China, said that there will be a steady growth in lending for the entire banking industry in 2011. This does not surely mean more lending in 2011 than in 2010, and the entire banking industry is expected to achieve stable growth.

Zhang Guanghua, deputy head of China Merchants Bank, said that the overall monetary policy will tighten in 2011 and the new loans scale for 2011 is estimated to be lower than this year's new loans target of 7.5 trillion yuan, standing at between 6 trillion and 7 trillion yuan.

This year's new loan target of 7.5 trillion yuan will be reached. Instead of just controlling the new loan scale, the central government will adjust the monetary supply using interest rates, lending and deposit-reserve ratio instruments.

According to UBS Securities LLC, to constantly make the lending cap for 2011 stand at about 7 trillion yuan, the government will likely take some measures including accelerating the pace of the RMB appreciation, stepping up the efforts to hedge against liquidity by raising the deposit reserve ratios and issuing more central bank bills as well as further lifting interest rates.

By People's Daily Online


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