November 14, New renminbi-denominated lending in October rose to higher-than-expected levels, showing the effect of the government’s fine-tuning measures, the China Business News reported on Monday.

Newly added local-currency lending was RMB 586.8 billion ($92.3 billion) in October, the People’s Bank of China, or central bank, said on Nov. 11. The figure was the most since June this year and rebounded from a 21-month low of RMB 470 billion in September.

“The significant monthly growth in new loans shows credit lending control has started to loosen in some fields,” said Er Yongjian, a researcher at Bank of Communication's (BoCom) Center for Financial Research.

In the first 3 quarters of this year, newly added renminbi-denominated loans fell by RMB 600 billion over the same period a year earlier, while new loans in October increased by RMB 17.5 billion on a yearly basis after Premier Wen’s fine-tuning announcement, the paper said, citing the central bank data.

The BoCom researcher estimated credit lending may expand again this year. New loans could reach RMB 600 billion-RMB 650 billion in both November and December and full-year credit growth could be around RMB 7.5 trillion, he said.

M2 Growth

China’s broad money supply (M2) was RMB 81.68 trillion by the end of October, according to the central bank’s statistics. The annual growth rate eased to 12.9% from 13.0 % in September.

The annual growth of narrow money supply (M1) also declined to 8.4%, compared with September’s 8.9%.

“The fine-tuning in macro-policy has partially eased the short-term liquidity squeeze, but the overall monetary supply is still tight,” China International Capital Corp. (CICC) said in a research note.

The growth of M2 may continue to fall in the coming months as declines in capital inflow will result in less foreign exchange purchases by banks, CICC said.

Source:21cbh.com