China to continue moderate credit policy in H2

An article on the China Banking Regulatory Commission's (CBRC) website reports the country's loans to the eastern and western areas, the non-performing loans ratio, and the usages of the loans.

Released on August 9, "Seven Features of the Incremental loans of Chinese Banks in the first half of 2009", says local and foreign currency loans from January to June amounted to 7.72 trillion yuan, a 32.8 percent year-on-year increase. However, experts from several sectors said this trend would not continue in the second half of 2009 and that the Chinese government would initiate a moderate growth in credit to support economic growth.

Guo Tianyong, director of the Research Center for China's Banking Sector said incremental credit loans would fall sharply in the second half of 2009 due to the decreased long-term investment projects of the government, and the restrictions of loans from regulatory institutions to prevent the misappropriation of loans for personal use.

The Chinese central bank said it would stick to its moderately loose monetary policy to consolidate the country's economic recovery in the second half and fine-tune the growth of loans with market tools.

In the article, the CBRC said about 51.6 percent of the longer-term yuan-denominated loans of up to 1.6 trillion yuan have been allocated to infrastructure projects.

More loans have gone to the country's less developed western regions, said CBRC, adding that among the top five provinces which received loans, autonomous regions and municipalities have received the most increases in loans, and four are in western China, while nine of the top 10 are in central or western China.

At the end of June, loans to small- and medium-sized enterprises (SMEs) stood at 13.7 trillion yuan, up 2.7 trillion yuan, or 24.1 percent from the beginning of the year. The loan growth was 1.5 percentage points higher than corporate loans, according to data from the CBRC.

Non-performing loans (NPL) at the country's commercial banks were down 42.7 billion yuan from the beginning of the year to 520.8 billion yuan at the end of June. The NPL ratio fell 0.64 percentage points.

However, financial support to rural areas, agriculture-related enterprises, and small- and medium-sized businesses won’t be reduced too much.

The central bank is issuing bills and stricter regulations may be imposed on the banking sector. The structure of loan growth was in line with the moderate “loose policy” in credit, said the CBRC. 
 
 

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