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China's Feb new yuan loans reach 1.1 trillion yuan

By Xin Zhiming (chinadaily.com.cn)
Updated: 2009-03-03 17:44

China's new yuan loans reached 1.1 trillion yuan ($161 billion) in February thanks to the rapidly increasing government spending in infrastructure to hold back the economic slowdown, according to a source close to the matter.

Related readings:  Banks urged to extend loan period for small firms  Bank loans see striking rise in Jan  Loan defaults dent bank incomes  ICBC reports strong mortgage loan growth in Jan

By Feb 20, the new yuan loans had reached 750 billion yuan, much higher than market expectations, the source told China Daily.

The liquidity increase might add some uncertainties to the country's monetary policy-making in the fourth quarter. Analysts have warned that if the economy recovers in the second half of this year, the ample liquidity as a result of the massive government stimulus could lead to high inflation.

The China Southwest Securities said in a report that China's new yuan loans may reach 6 trillion yuan for the whole year. A report by Haitong Securities said they could amount to 5.5 trillion yuan.