December 6, 2012 / 2:01 AM / 5 years ago

China November loan growth seen making mild rebound: Reuters poll

BEIJING (Reuters) - China’s banks probably stepped up lending in November, albeit modestly, with the government keeping monetary policy relatively loose to support funding for companies as economic growth revived from a lackluster third quarter, a Reuters poll showed.

Chinese banks are expected to have lent 550 billion yuan ($88.34 billion) of new loans last month, slightly higher than October’s 505.2 billion yuan, a Reuters poll of 27 economists showed.

That would bring total bank lending to above the government’s undisclosed target of 8 trillion yuan in 2012, higher than 7.5 trillion yuan of new loans extended in 2011.

Chinese banks extend loans at the central government’s behest, and money and credit numbers have become among China’s most closely watched economic data as they reveal both policy aims and the state of credit demand in the world’s second largest economy.

“We expect robust loan demand and supply as the government has speeded up infrastructure investment project approvals in September, while private sector confidence has improved,” Ting Lu, an economist at Bank of America-Merrill Lynch, wrote in a note to clients.

Economists also forecast the broader measure of M2 money supply grew 14.1 percent in November, keeping pace with October’s increase. Annual growth in outstanding yuan loans was seen dipping to 15.7 percent in November, from October’s 15.9 percent.

Besides the modest pick up in credit data, analysts say increased use of non-banking financing channels including corporate bonds and trust loans are likely to keep growth in total social financing on a positive trend in November.

Total social financing is a blanket term created by China’s central bank to measure liquidity and includes multiple sources of financing in the economy, from initial public offerings to bank loans and bond sales.

Jian Chang, China economist at Barclays, said in a research note that they expect more bond issuances and off-balance sheet lending to support a further increase in total social financing in November, which would support GDP growth between 7.5 to 8 percent.

China’s total social financing aggregate stood at 1.29 trillion yuan in October, down from 1.65 trillion yuan in September.

After easing monetary policy earlier this year, credit supply has increased while inflation has stayed low, allowing Beijing to hold off on additional pro-growth measures.

Some analysts think that may change after the ruling Communist Party’s Congress selected a new leadership last month.

Chinese Communist Party chief Xi Jinping said on Tuesday that China will maintain its fine-tuning of economic policies in 2013 to ensure stable economic growth.

Official and private-sector factory surveys showed earlier this week the world’s No. 2 economy is reviving after seven quarters of slowing growth as the pace of growth in the manufacturing sector has quickened.

Reporting By Xiaoyi Shao and Lucy Hornby; Editing by Simon Cameron-Moore

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