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Yuan lending expansion keeps momentum

By Wei Tian (China Daily)

08:20, February 22, 2013

China's credit supply maintained rapid growth in February, after reaching its fastest pace in two years in the first month of the year.

Experts said the figure - an indicator of overall liquidity - will boost confidence in a brighter economic outlook this year, but also raises concerns about a new round of over-investment.

By the end of last week, China's "big four" State-owned banks had added 250 billion yuan ($40.05 billion) in new yuan loans this month, surpassing the 180 billion yuan recorded in the whole of February last year.

The move continued the trend seen in January, when new yuan lending reached 1.07 trillion yuan, the highest monthly reading since February 2010.

In a report issued earlier this month, the People's Bank of China, the country's central bank, said it will use multiple monetary tools to guarantee "reasonable liquidity on the market and proper growth of credit supply".

But Lu Zhengwei, an economist with the Industrial Bank Co, said the recent credit figures were astonishing, rather than meeting the central bank's request for "proper growth".

Monthly total new financing between 1 and 1.5 trillion yuan is considered "sufficient", while an amount above 1.8 trilion yuan is "extremely high", Lu said.

Total new financing, including both bank and non-bank credit, in January amounted to 2.54 trillion yuan, an increase of more than 50 percent compared with December and more than double that of a year ago.

A report by Citic Securities Co Ltd attributed the record volume in January to growing financing demand for infrastructure projects, as well as more housings loans amid the improving property market.

At a conference in January, China's Railways Minister Sheng Guangzu announced a 650 billion yuan investment plan for 2013.

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