China's central bank yesterday warned of excessive investment
and loans growth in the country, pledging to take active measures
to curb the trend.
China's financial institutions granted 1.26 trillion yuan
(US$157.5 billion) of loans in the first quarter, up 519.3 billion
yuan (US$64.9 billion) from the same period last year, according to
the quarterly monetary policy report issued by the People's Bank of
China yesterday
The country's outstanding loans stood at 21.9 trillion yuan
(US$2.7 trillion) at the end of March, a 14 percent growth
year-on-year.
The central bank attributed the growth to a surge of fixed asset
investments with a flood of new construction projects nationwide in
the first quarter and more willingness on the part of the
commercial banks to lend as their capital adequacy was
enriched.
Much of the lending was granted to infrastructure construction
projects, particularly real estate, transportation, energy,
manufacturing and public utilities, the report said. Meanwhile,
personal loans growth slowed in the first three months of the
year.
The central bank pledged to enhance policy guidance to financial
institutions and urged them to be rational and balanced in lending
and to upgrade their loan structure.
It will be "more active in monetary monitoring" to prevent
excessive growth in lending in the future and will adjust the total
loan supply as appropriate, the report said.
China's M2, the broad measurement of money supply, stood at 31
trillion yuan (US$3.9 trillion) by the end of March, an 18.8
percent increase year-on-year, according to central bank
statistics. The growth rate was 4.7 percentage points higher than a
year ago.
The central bank report attributed the growth to the rapid
increase of fixed deposits of both individuals and
corporations.
Real estate continued to be in the spotlight as house prices in
some big cities witnessed abnormal growth in the first quarter,
making monetary authorities cautious.
When more new real estate projects began in the first quarter,
the growth of commercial housing sales slowed down during the
period and the number of vacant houses continued to rise, the
central bank report said.
Real estate developers began construction on a total 170 million
square metres of commercial-use buildings and houses in the first
quarter in China, up 22.1 percent year-on-year. But the sales of
such houses only rose by 10.2 percent during the period, down 10.1
percentage points from the same period last year.
The central bank said it would continue to liberalize the
interest rate scheme and deepen reform of rural financial
institutions.
(China Daily June 1, 2006)