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Report: China new bank loans likely fell in April

Report: China new bank loans likely fell in April

China's new bank lending in April was likely above 600 billion yuan ($87.8 billion), sharply lower than the record trillion-plus yuan loans in earlier months this year, a state-run newspaper said Tuesday, citing unnamed industry figures.
China's banks ramped up lending early this year with government encouragement as Beijing fought to revive flagging economic growth. New loans in March totaled 1.9 trillion yuan ($220 billion), with new lending for the first quarter totaling 4.58 trillion yuan ($670.6 billion).
Lending moderated in April to above 600 billion yuan and is likely remain at a similar level in May and June, the China Securities Journal, a government affiliated newspaper reported. Such reports often match later official data announcements.
The plentiful supply of credit accompanying a 4 trillion yuan ($586 billion) government stimulus package has helped reinforce expectations that China's economy is already recovering from the worst of the slump that hit late last year as demand for exports plunged.
It is also typical of lending patterns in China, where credit often peaks early in the year and then tapers off as the government exerts control.
But it has also raised concern over the hazards of wasteful investment and bad debt, given China's still relatively weak economic activity.
"Clearly, new lending in the rest of the year at the same pace ... or half as fast ... as in the first quarter would be unthinkable and too fast," UBS economist Tao Wang said in a report issued last week.
Apart from the risk of spurring inflation by pumping too much money into the economy, "Growth may not be sustainable if demand is mainly driven by the government and easy credit, and the risk of massive resource misallocation rises," she said.
While recent surveys suggest a mild rebound in export and domestic industrial demand, China's 6.1 percent growth in the first quarter fell short of the leadership's 8 percent goal for the year.
Electric power generation _ a key indicator of industrial activity _ likely fell by 4 percent in April from a year earlier, Xue Jing, director of the statistics department of the China Electricity Council, told the state-run newspaper China Daily.
So far, there has been no big recovery in industrial power consumption, which accounts for a large part of the total power usage, the newspaper said in a report Tuesday.
Power generation is still "fluctuating at the bottom level," Xue was quoted as saying.


Updated : 2020-12-03 15:39 GMT+08:00