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New lending decrease in Nov. enhances necessity of further RRR cut

(Xinhua)

19:48, December 14, 2011

BEIJING, Dec. 14 (Xinhua) -- The People's Bank of China (PBOC), China's central bank, announced Wednesday that new yuan-denominated loans in November declined from the previous month amid a slowing economy.

The PBOC data out Wednesday showed new yuan loans last month rose 7.8 billion yuan (1.2 billion U.S. dollars) year-on-year to 562.2 billion yuan.

However, on a monthly basis, the figure was down 24.6 billion yuan compared to that in October, signaling strains faced by the nation's banks to lend under high requirements to set aside reserves.

New loans began picking up steam in October after the nation's economic growth slowed to 9.1 percent in the third quarter, down from 9.7 percent in the first quarter and 9.5 percent in the second.

Previous data showed new yuan-denominated lending in October reached 586.8 billion yuan in October, the biggest monthly lending since the third quarter this year. New loans in the month saw a sharp rise from 470 billion yuan in September.

A key economic work conference that wrapped up Wednesday had set the tone that the country will seek stable and relatively fast economic growth next year amid the "extremely grim and complicated" global outlook.

Zhu Baoliang, deputy director of the Economic Forecast Department of the State Information Center, a government think tank, said that China must stabilize economic growth to prevent a sharp plunge, which might dampen employment and cause social problems.

The country will preset or fine-tune monetary policy according to changes in economic development, employ multiple monetary policy tools and maintain "reasonable increase" in money and credit supply, according to a statement released after the conference.

To ease banks' credit crunch amid easing price pressure since July and decreasing yuan funds outstanding for foreign exchanges in October, the PBOC cut the reserve requirement ratio (RRR) by 50 basis points for the first time in three years on Dec. 5.

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