China's credit explodes in first week of '10
- Source: Global Times
- [01:26 January 12 2010]
- Comments
By Li Qiaoyi
New bank loans reached 600 billion yuan ($87.87 billion) in the first week of January, the Economic Information Daily, run by the official Xinhua News Agency, reported Monday , quoting unnamed sources.
A glut of credit projects taken on by banks late last year caused the credit explosion early this month, as bank loans usually see higher growth in the beginning of the year, said Sun Peng, a banking sector analyst with BOCI Securities, a subsidiary of the Bank of China (BOC).
But bank credit will not reach the nearly 10 trillion yuan ($1.46 trillion) in record growth seen last year, and the central bank has signaled policy tightening by taking currency out of circulation recently, said Lian Ping, chief economist with the Bank of Communications (BCM).
The central bank raised yields of three-month central bank bills for the first time in 19 weeks on January 7, the central bank announced in a statement.
Rising fears of inflation in 2010 are likely to push decision makers to pay attention to credit control as well.
Many factors, including bulk commodity price hikes, rising food prices and utility price increases are likely to keep the consumer price index (CPI) in an upward trend, Lian said. The CPI broke back into positive territory in November.
Strong trade growth also added inflationary pressure, Goldman Sachs said in a research report released Sunday.
Exports rose 17.7 percent in December from a year earlier, the first positive reading on a year-on-year basis since November 2008, according to data released by the General Administration of Customs Sunday.
Some analysts believe banks' reserve requirement ratio will be lifted in the near term to further tighten China's monetary policy.
China is likely to start raising the reserve requirement ratio for commercial banks in the first quarter of 2010, Ma Jun, Deutsche Bank's Chief Economist for Greater China, said on the sidelines of an investment forum Monday in Beijing.
Sun from BOCI Securities also said the reserve requirement ratio is likely to rise 0.5 percent in the first half of the year.
