New yuan loans gather mo­men­tum in­May

Mini stim­u­lus mea­sures, mon­e­tary pol­icy tweaks to keep growth on track

China Daily (Canada) - - BUSINESS - By JIANG XUEQING jiangx­ue­qing@chi­nadaily.com.cn

China’s new yuan loans in­creased last month as au­thor­i­ties stepped up their ef­forts to sta­bi­lize the econ­omy and en­sure growth by tak­ing “mini stim­u­lus” mea­sures and fine-tun­ing mon­e­tary pol­icy.

New yuan loans reached 870.8 bil­lion yuan ($140 bil­lion) in May, up 12.4 per­cent from 774.7 bil­lion yuan in the pre­vi­ous month and 30 per­cent from 669.4 bil­lion yuan a year ear­lier, the People’s Bank of China said in a state­ment on Thurs­day.

M2, the broad­est gauge of money sup­ply, rose to 118.23 tril­lion yuan, up 13.4 per­cent year-on-year, and 0.2 per­cent­age point from the year-on-year M2 growth in April.

The cen­tral bank fig­ures also showed that ag­gre­gate fi­nanc­ing was 1.4 tril­lion yuan in May, com­pared with 1.55 tril­lion yuan the month be­fore.

Credit con­di­tions were ob­vi­ously looser in May than in April mainly be­cause China has launched a se­ries of mini stim­u­lus poli­cies, said Zhou Jing­tong, a se­nior macroe­co­nomic

NEW LOANS an­a­lyst at the Bank of China Ltd’s In­sti­tute of In­ter­na­tional Fi­nance.

“China’s mon­e­tary pol­icy will tend to ease while still re­main­ing pru­dent,” he said. “The trend is al­ready be­com­ing vis­i­ble.”

The cur­rent­mon­e­tary fine-tun­ing aims to of­fer op­ti­mum con­di­tions for sta­ble growth, which makes it “es­sen­tially dif­fer­ent” from the pre­vi­ous round of mon­e­tary eas­ing dur­ing the 2008-09 fi­nan­cial cri­sis, Zhou said.

He ex­pects the Chi­nese econ­omy to sta­bi­lize in the sec­ond quar­ter with GDP growth ris­ing to 7.5 per­cent from 7.4 per­cent in the first quar­ter, which was the slow­est pace since 2012.

Zhang Zhi­wei, chief China econ­o­mist at No­mura Hold­ings Inc in Hong Kong, also said in a re­port that pol­icy eas­ing will ac­cel­er­ate over the next sev­eral months and ex­pected a re­serve re­quire­ment ra­tio cut in the third quar­ter.

The PBOC an­nounced a 0.5 per­cent­age point cut in re­serve re­quire­ments for cer­tain banks on Mon­day to en­cour­age tar­geted lend­ing to the farm­ing sec­tor and smaller com­pa­nies.

Ef­fec­tive June 16, the re­duc­tion ap­plies to two-thirds of city commercial banks, 80 per­cent of non-county level ru­ral commercial banks and 90 per­cent of non-county level ru­ral co­op­er­a­tive banks.

The lat­est re­serve re­quire­ment cut was launched soon af­ter­Premier LiKe­qiang told of­fi­cials from eight cities and prov­inces, in­clud­ing Bei­jing, He­bei and Hei­longjiang, to be proac­tive in sup­port­ing their lo­cal economies as the Chi­nese econ­omy still faces rel­a­tively big down­ward pres­sures.

Dur­ing a meet­ing with the of­fi­cials on June 6, Li stressed that the cen­tral and lo­cal gov­ern­ments should take re­spon­si­bil­ity to en­sure that the 7.5 per­cent GDP growth tar­get for this year is achieved and should have “a sense of ur­gency”.

The State Coun­cil an­nounced onWed­nes­day that China will boost pub­lic in­vest­ment in the net­work con­struc­tion of rail­ways, high­ways, wa­ter­ways and avi­a­tion in the Yangtze River re­gion and cut some util­ity com­pa­nies’ taxes by a to­tal of 24 bil­lion yuan a year.

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