* April new loans 774.7 bln yuan, vs March's 1.05 trillion
* April M2 up 13.2 pct yr/yr, vs 12.1 pct in March
* Data shows central bank policy largely neutral
(Adds details, economists' comments)
BEIJING, May 12 China's new bank lending and
total social financing weakened in April, but money supply
growth picked up slightly, indicating the central bank is
treading cautiously in steering policy to support the slowing
Chinese banks made 774.7 billion yuan ($124.39 billion)
worth of new yuan loans in April, lower than a forecast of 880
billion yuan in a Reuters poll and below than the previous
month's 1.05 trillion yuan, central bank data showed on Monday.
Growth in the broad M2 money supply picked up to 13.2
percent in April from 12.1 percent in March, which was the
weakest pace in more than a decade, the People's Bank of China
said in a statement on its website, www.pbc.gov.cn. The April
growth was higher than a Reuters poll forecast of 12.2 percent.
"We cannot be optimistic about the total financing demand,
as the April credit data shows both new yuan loans and social
financing aggregate grew at a slower pace," said Xu Bo, an
analyst at Bank of Communications in Shanghai.
"We don't expect any big loosening measures by the central
bank, at least in the coming three to six months."
Growth in outstanding yuan loans also slowed, to 13.7
percent in April from 13.9 percent in March. The April pace was
the lowest in more than eight years.
The central bank also said China's total social financing
aggregate, a broad measure of liquidity in the economy, was 1.55
trillion yuan in April versus 2.07 trillion yuan the month
But central bank officials insist that current money supply
growth remains at a reasonable level and total liquidity is
ample enough to meet the needs of the real economy. The central
bank aims for a 13 percent annual rise in M2 this year.
Recent factory surveys pointed to initial signs of
stabilisation in the world's second-largest economy as the
government uses targeted measures, including accelerated
spending on railways and affordable housing, to underpin growth.
A TARGETTED APPROACH
Central bank governor Zhou Xiaochuan was reported as saying
on Saturday that China will not use any large-scale stimulus to
boost its economy, in response to speculation that authorities
might lower reserve requirements for banks to spur growth.
The government is trying to deal with the lingering hangover
of a 4 trillion yuan ($652 billion) stimulus package implemented
in 2008-2009, which resulted in piles of local government debt.
"Although the authorities have pledged to tackle
overcapacity in certain sectors of the economy, they seem to
favour a targeted approach in recent months, and credit is still
abundant for the wider economy," said Chester Liaw, an economist
at Forecast Pte in Singapore.
The central bank said earlier this month that it would keep
monetary policy steady with timely fine-tuning to help stabilise
economic growth, while introducing greater yuan flexibility.
While maintaining its longstanding prudent monetary policy,
the central bank has started to fine-tune its stance to support
the slowing economy. Last month, the central bank cut the
reserve requirement ratio (RRR) for rural banks and cooperative
banks to shore up the weaker agricultural sector.
On Tuesday, China will report April data for industrial
output, retail sales and urban investment
($1 = 6.2280 Chinese Yuan)
(Reporting by China economics team; Editing by Richard Borsuk)