China's bank loans hit 1.07 trillion yuan in February

Special Report:Global Financial Crisis

BEIJING, March 12 (Chinese media) -- China's bank credit continued to expand in February, with Renminbi loans rising to 1.07 trillion yuan (156.3 billion U.S. dollars), up 827.3 billion yuan from the same month a year ago, the People's Bank of China said Thursday.

It is the second straight month that new yuan-denominated loans exceeded 1 trillion yuan. January saw new loans hit a record 1.62 trillion yuan, double the figure from the same period last year.

Premier Wen Jiabao said on March 5 at the opening of the annual session of the National People's Congress, the top legislature, that new yuan-denominated loans this year were expected to reach 5 trillion yuan.

According to the central bank, outstanding Renminbi loans stood at 33.06 trillion yuan by the end of February, up 24.17 percent year on year. The growth was 5.44 percentage points higher than the end of 2008, and 2.85 percentage points higher than January.

Through February, the M2 figure -- a broad measure of money supply, which covers cash in circulation and all deposits -- grew 20.48 percent from a year earlier to 50.71 trillion yuan.

The narrow measure of money supply, M1 (cash in circulation plus corporate current deposits), was up 10.87 percent year on year to 16.65 trillion yuan, and 4.19 percentage points higher than the January growth.

The outstanding amount of M0, or cash in circulation, hit 3.51 trillion yuan, up 8.28 percent from the same period last year.

"The rise in M1 coupled with growing Purchasing Managers' Index (PMI) in February showed signs of recovery in factory production," said Liu Yuhui, a researcher at the Institute of Finance and Banking of the Chinese Academy of Social Sciences.

The discrepancy between M1 and M2 lessened in February, which suggested the corporate current deposit was increasing and therefore more loans were put into the real economy, he said.

China's PMI, a major manufacturing activity indicator, rose to 49 last month from 45.3 in January, 41.2 in December and a record low of 38.8 in November. A reading of above 50 suggests expansion, while one below 50 indicates contraction.

Lian Ping, chief economist at the Bank of Communications, attributed the increase of new loans to the expansion of medium and long-term loans and bill financing.

"A number of new infrastructure projects supported by the 4-trillion-yuan stimulus packages began operation in February, which led to the increase in medium and long-term loans," Lian said.

Medium and long-term loans, according to the central bank, stood at 381.5 billion yuan in February. The figure accounted for 36 percent of the total new loans, up from 34 percent from the previous month.

The bill financing, which only accounted for around 10 percent of total new loans during the past two years, has continued a sharp increase since the end of 2008. It accounted for 47 percent of the total new loans, or 487 billion yuan, in February.

"Enterprises prefer bill financing as the interest rate is lower, while banks may have better risk control as borrowers are required to pay a deposit," Lian said.

However, the surging bill financing, with maturities of 180 days at most, may suggest that the money has been spent in other fields rather than supporting the country's long-term development, he said.

CPI falls to minus

1.6% in Feb.

PPI down 4.5% in

Feb.

Exports plummeted

25.7% year-on-year in February

Imports slumped 24.1

percent

China's retail sales

up 15.2 percent in first two months

Jan.-Feb. urban fixed

asset spending up 26.5%

China's bank loan

hits 1.07 trillion yuan in February

China's industrial

output up 3.8% in first two months

China's monetary

policy takes effect

Chinese officials brief on boosting domestic demand



China's stimulus packages for 10

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China's CPI up 1% in Jan. 2009

China's monthlyCPI, PPI in 2008

Jan.

Feb.

March

April

May

June

CPI

+7.1%

+8.7%

+8.3%

+8.5%

+7.7％

+7.1%

PPI

+6.1%

+6.6%

+8%

+8.1%

+8.2%

+8.8%

July

Aug.

Sept.

Oct.

Nov.

Dec.

CPI

+6.3%

+4.9%

+4.6%

+4%

+2.4%

+1.2%

PPI

+10%

+10.1%

+9.1%

+6.6%

+2.0%

-1.1%

China CPI up 5.9% in

2008