China bank lending higher in December

Chinese banks ramped up lending at the end of 2011, official data showed yesterday, after Beijing relaxed credit restrictions and ordered banks to boost support for small businesses.
China’s state-owned lenders issued 640.5 billion yuan (USD 101.5 billion) in new loans in December, compared with 562.2 billion yuan in November, the People’s Bank of China said in a statement.
The late surge in lending takes the total value of new loans handed out last year to 7.47 trillion yuan, the central bank said.
The full-year figure was below the 7.95 trillion yuan in 2010 as Beijing hiked interest rates and increased the amount of money banks must keep in reserve as it battled to rein in inflation and soaring property prices.
The broadest measure of money supply, M2, rose 13.6 percent year-on-year in December, accelerating from 12.7 percent in November.
The value of new loans beat analysts’ expectations for 580 billion yuan, according to a Dow Jones Newswires forecast, and came after policymakers in November cut the amount of money banks must keep in reserve.
Authorities have also ordered banks to boost lending to small businesses, which have been forced to borrow money at very high interest rates from informal lenders after being snubbed by major banks.
Many are now facing bankruptcy as they struggle to cope with rising wages, inflation and high commodity prices even as demand for their products in China and overseas weakens.
Authorities are expected to further relax restrictions on lending in the coming months to prevent a painful hard landing in the world’s second largest economy.