* Nov new yuan loans 522.9 bln yuan, f'cast 550 bln yuan
* Total financing 1.14 trillion yuan, down from Oct
* Nov M2 up 13.9 pct yr/yr, lending up 15.7 pct
* Recovery seen on track due to supportive polices
By Aileen Wang and Kevin Yao
BEIJING, Dec 11 China's new loans and money
supply came in below expectations in November while the pace of
overall financing eased, adding to signs that a recovery in the
world's second-largest economy will be tepid and uneven even as
global demand remains weak.
Still, analysts believe the government's pro-growth policies
and favorable liquidity conditions are helping the economy
slowly regain traction, as seen in a raft of indicators this
China's top leaders have pledged to continue policy
fine-tuning in 2013 to ensure stable economic growth.
"We think monetary policy is still loose, and (authorities)
will maintain the current loose stance for the next several
months. That is strong enough to keep the economic recovery on
track," said Zhang Zhiwei, China economist at Nomura in Hong
"We don't think the government needs to cut interest rates.
Most likely they will just keep ongoing credit loose."
Chinese banks extended 522.9 billion yuan ($83.73 billion)
of new local currency loans in November, the central bank said
on Tuesday, below market expectations of 550 billion yuan but
still outstripping October's 505.2 billion yuan.
The November new loan data - released on the People's Bank
of China on its website www.pbc.gov.cn - showed that banks made
7.75 trillion yuan in new loans in the first 11 months of 2012,
already exceeding 7.47 trillion yuan in all of 2011.
In a separate release, the central bank said M2 money supply
grew a slower-than-expected 13.9 percent in November from a year
earlier, while outstanding yuan loans in November rose by 15.7
percent from a year earlier, matching market forecasts.
"M2 has mirrored economic activity. We've felt all along
that China wouldn't have a strong recovery, that there would be
a lot of volatility along the way," said Xianfang Ren, senior
analyst at IHS Global Insight in Beijing.
The weaker-than-expected credit data followed data on Monday
that showed export growth slowed sharply to a much
lower-than-expected 2.9 percent in November, underscoring the
global uncertainties dragging on an economy which is showing
otherwise solid signs of a pick up in domestic activity.
Data at the weekend showed both industrial output and retail
sales rose in November at their fastest annual pace in eight
months, reinforcing the view that growth is picking up in the
fourth quarter from 7.4 percent in the third quarter, its
weakest pace since the depths of the global crisis in early
The PBOC cut interest rates in June and July and has lowered
required reserve ratios (RRR) three times since late 2011 to
free an estimated 1.2 trillion yuan ($190 billion) for lending
as part of a year-long programme of policy fine-tuning.
It has since held off on more aggressive easing, opting
instead to pump short-term cash into money markets to ease
credit strains, a move analysts say reflects Beijing's concerns
about a possible flare-up in property prices and broader
Meanwhile, the government has loosened the debt raising tab
for local government financing vehicles (LGFVs) which have been
under pressure to repay bank loans incurred under Beijing's 4
trillion yuan stimulus programme in 2008-09, analysts say.
That partly explains a sharp rise in China's total social
financing aggregate, a broad measure of liquidity in the economy
that covers bank loans, trust loans, bank acceptance bills,
corporate bonds and equity financing.
New corporate bond issuance pulled back to 181.7 billion
yuan in November from a record high of 299.2 billion yuan in
October, central bank data showed.
"The slowdown in corporate bond issuance in November was
likely temporary as it was driven mainly by a one-off tightening
of credit standards by regulators - rather than insufficient
funding demand," Qu Hongbin, China economist at HSBC, said in a
note to clients.
"With local government financial vehicles still a dominant
driver of total bond issuance activity (accounting for
approximately 80 percent of corporate bond issuance so far this
year) growth of corporate bond issuance should resume its trend
upwards as we enter 2013."
Qu said recent momentum in total social financing growth
looks set to support a GDP growth rate of at least around 8
percent in coming quarters.
Total social financing fell to 1.14 trillion yuan in
November from 1.29 trillion yuan in October, but the aggregate
is on course to hit a record of 15 trillion yuan this year, up
17 percent from 2011.
However, smaller and private firms are still facing limited
access to credit and investment incentives, which have gone
disproportionately to the state sector, particularly since the
2008/09 financial crisis.
New yuan bank loans accounted for only 55 percent of the
country's total financial aggregate in November.