China credit growth exceeds estimates

Beijing, China - China’s broadest gauge of new credit exceeded projections, signaling that the funding taps remain open even as the government pushes to curb excessive borrowing.

Aggregate financing stood at 1.82tn yuan (US$276bn) in September, the People’s Bank of China said on Saturday, compared with an estimated 1.57tn yuan in a Bloomberg survey and 1.48tn yuan the prior month. New yuan loans stood at 1.27tn yuan, versus a projected 1.2tn yuan. The broad M2 money sup- ply increased 9.2 per cent, exceeding estimates and picking up from the prior record low.

Policy makers have been clamping down on shadow banking while also working to keep corporate borrowing intact to avoid impeding growth. The central bank said on September 30 it will reduce the amount of cash some banks must hold as reserves from next year, with the size of the cut linked to lending to parts of the economy where credit is scarce.

“Momentum continues to be very strong,” said Kenneth Courtis, chairman of Starfort Investment Holdings and a former Asia vice chairman for Goldman Sachs Group Inc. “Loan demand of the private sector has finally turned up in recent months.”

“This means that there is little hope of further policy easing in the fourth quarter as the monetary policy is very accommodative,” said Zhou Hao, an economist at Commerzbank AG in Singapore. “There could be even a tightening bias.”