China May lending slows more than forecast

BEIJING, June 13 (Reuters) – Chinese banks lent 551.6 billion yuan in local currency loans in May, missing market forecasts for 610 billion yuan, the People’s Bank of China said on Monday.


— Outstanding yuan loans up 17.1 pct yr/yr (forecast 17.1 pct)

— M2 money growth up 15.1 pct (forecast 15.4 pct)



“The lending growth last month is slower than market expectations, showing that tightening measures are biting.

“But it is still to early to say that the loan demand is declining because of a slowing economy, and we should not read too much into a single month’s loan data.”



For details, see the People’s Bank of China website at MARKET REACTION: The Shanghai stock market edged lower to nurse losses of 1.1 percent. The Chinese yuan eased to 6.4858 per dollar.


— The People’s Bank of China has raised banks’ reserve requirements — its preferred tool to mop up excess cash in the economy — eight times and lifted interest rates four times since October in a bid to quell inflation.

— In addition, the government has ordered banks to scale back lending to the red-hot property sector and financing vehicles run by local governments.

— Lending and money growth has slowed steadily in recent months in response to the tightening steps after an extraordinary surge in bank credit in 2009 to counter the global financial crisis. — Chinese banks issued a combined 17.5 trillion yuan of new local currency loans in 2009 and 2010, almost a quarter of the economy’s total output during that time.