Longer-term lending will increase noticeably in China on demand from the property sector while short-term financing will fall, the central bank said in a report on Friday, showing that it intends to keep credit growth accommodative but more balanced in the coming year.
The report by the statistics department of the People's Bank of China lent credence to that view, indicating that it is content to see strong loan growth next year, so long as the money finances investment and not stock-market speculation. This relatively relaxed stance from the central bank could put China in line for at least 7.5 trillion yuan ($1.1 trillion) in new loans next year, said Xing Ziqiang, an economist at China International Capital Corp in Beijing.
A gusher of loans in the first half of this year, when Beijing called on banks to help pull the economy out of the depths of the global financial crisis, has put the country on track for a record 10 trillion yuan in new credit this year. Short-term discounted bills played a crucial part early in the surge, but officials clamped down on such lending as they grew alarmed that it was being funnelled into the stunning stock market rally at the time. The central bank indicated that there would be no repeat of the bill financing bonanza.
China's growth in the third quarter slowed to 8.7 percent from 14.9 percent in the second quarter on an annualised, seasonally adjusted quarter-on-quarter basis, the central bank said in its report. The central bank also noted that managing inflationary expectations was now a priority, with the producer price index (PPI) bottoming out and the consumer price index (CPI) set to rebound next year.
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