China bank lending may slow, but not dramatically

V. Phani Kumar MarketWatch 04/15/2009 19:44

HONG KONG (MarketWatch) -- Chinese banks will likely moderate their lending activity in the remaining months of 2009 after making a burst of loans in the first quarter, but the slowdown won't be so dramatic as to halt the mainland's economic recovery in the tracks.

Rather, the banks could lay more emphasis on medium- to long-term lending and balance the mix of the loans they have already made so far this year, analysts said.

"There has been too much short-term loans and bills [financing] over the last three months. That has to slow. It's not sustainable, and I think the central bank will address that issue," said Kevin Lai, an economist at Daiwa Institute of Research.

Chinese banks made new loans of 4.58 trillion yuan ($670 billion) in the first three months of the year, more than 90% of a government target of 5 trillion yuan for the entire year. That compares with total bank lending of 4.9 trillion yuan in 2008.

Lai said China's aim for 5 trillion in bank loans for 2009 was a "soft target" and that most likely it was going to be exceeded.

"But again, the key is how much we have in terms of medium- and long-term loans. Those loans are picking up, which is good. At the same time, short-term loans seem to be going down. That's a better mix and a better structure," he said.

Source

Add your comment Send Print Report

Add your comment

	Anonymous comment

Anonymous comment

Nickname:	Reserve nickname Reserve nickname Please select nickname you would like to use and choose your password. Nickname: Password: Retype password: Email address:
Password:
	Remember me on this computer