BEIJING, Aug. 12 -- Credit controls to keep disbursals within expectations, say experts
Chinese banks disbursed 532.8 billion yuan ($78.7 billion) as new yuan loans in July, an indication that fresh lending would remain stable and at relatively low levels for the next five months due to the lending curbs and the economic slowdown.
New yuan lending in July represented a measured slowdown from June, when banks issued 603.4 billion yuan in such loans, according to the People's Bank of China, the central bank.
"The figure is well in line with expectations," said Zhang Xiaojing, a senior economist at the Chinese Academy of Social Sciences.
"By strengthening credit controls, the authorities are learning lessons from the liquidity surge of 2008, which pushed up asset prices," said Dong Xian'an, the chief economist of Industrial Securities.
"It could not be too high given the policymakers' consistent regulation of the economy this year," Zhang said.
He said with the economy expected to slow down this year and the curbs on the real estate sector, local government debt and highly polluting industries, the demand for credit may weaken and new yuan loan growth would not surge in the remainder of this year.
"Lending for real estate sector, local government financing and sectors that heavily consume energy and resources and are highly polluting would decrease," he said.
The July figure brought new loans for the first seven months to more than 5.16 trillion yuan, compared with 7.73 trillion yuan during the same period last year.
China has set a target of 7.5 trillion yuan for new yuan loans this year and the regulators have resorted to "window guidance" to ask commercial banks to lend less to meet that target.
The move comes after the exceptional 9.6 trillion yuan new yuan lending last year was blamed for problems like soaring asset prices and inflation.
Thanks to the country's contingent policies since early this year, when the 11.9 percent year-on-year gross domestic product growth in the first quarter triggered worries about economic over-heating, other monetary indicators also weakened in July.
M2, the broadest measure of money supply, which includes cash and money in all savings accounts, rose 17.6 percent at the end of July from a year earlier, lower than the 18.5 percent increase at the end of June.
M1, the narrow measure of money supply, which includes cash in circulation and current corporate deposits, rose 22.9 percent from a year earlier, down by 1.7 percentage points from the end of June.
"Over the next few months M2 money supply growth is expected to remain fairly stable," said Nikhilesh Bhattacharyya, an associate economist with Moody's Analytics.