China's GDP grows 11.9% in Q1, fueling overheating fears (2)

20:00, April 15, 2010      

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Following a government call to support economic recovery, China's banks lent a record 9.6 trillion yuan in new loans last year, which ignited fears of bad loans and asset bubbles.

With repeated government warnings of such risks since the end of last year, bank lending fell to 2.6 trillion yuan in the first quarter this year, 1.98 trillion yuan less than the corresponding period last year, the People's Bank of China, the central bank, said Monday.

Tang Jianwei, an analyst with the Bank of Communications, said macro-economic control policy should focus on preventing possible overheating.

"Although overheating has not become prominent, policy design should be preemptive in checking the looming risk," he said.

The relatively easy monetary policy should be phased out gradually, he said, but not in a way that could put the brakes on the recovery momentum.

The benchmark Shanghai Composite Index ended almost flat at 3,164.97 points on Thursday, down 0.04 percent, or 1.22 points, as the market anticipated monetary tightening measures.

INFLATION TARGET DIFFICULT

China's consumer price index (CPI), the main gauge of inflation, saw a moderate rise of 2.4 percent year on year in March, and a decline of 0.7 percent month on month.

The inflation rate was still below the government's upper limit of 3 percent inflation this year, but staying within the limit might be "difficult and challenging," said Li.

For the first quarter, the figure was up 2.2 percent from the same period last year.

China had set a ceiling of 3 percent for rises in consumer prices in 2010, according to a government work report delivered by Premier Wen Jiabao last month at the annual parliamentary session.

"China's consumer prices are basically stable," Li said, adding that the goal was still within reach with "concerted efforts and solid work."


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(Editor:赵晨雁)

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