Chinese banks intensify lending

Chinese banks lent a record US$160 billion in March in a bid to boost China’s faltering economy.

The amount is the largest monthly extension of credit since January 2011 when new loans hit US$159 million. The spike in lending also showed a stronger-than-expected growth in money supply, making an interest rate cut unlikely since China can ease monetary policy by simply loosening credit controls.

Economists had expected banks to loan US$127 billion in March. Outstanding loans at the end of March came to US$9.08 trillion, an increase of 15.7% from a year earlier.

The March jump boosted overall lending to US$390 billion in the first quarter, higher than the quarterly target of US$380 billion and above the US$349 billion posted in the same period last year.

M2 money supply rose to a three-month high of 13.4% in March from a year earlier, higher than forecasts for 12.9% growth.

"The new loans number is very strong. It signals that loan demand has rebounded and shows that the economy is turning," said Zhang Zhiwei, an economist at Nomura in Hong Kong.

"This is another signal that reinforces our view that the first quarter is the bottom of the cycle and that momentum is picking up."

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