The new bank lending binge continues. Five hundred billion yuan’s worth of new loans were extended in the first week of the month. That just about matched the 481 million yuan of new loans made in December, when banks were under the cosh to keep the year’s lending within touching distance of the government’s target of 7.5 trillion yuan. New loans for 2010 came out at 7.95 trillion yuan (down from 2009’s stimulus-fueled 9.6 trillion yuan). As happened last year, plenty of new lending was just pushed out into the first month of this year.
New lending tends anyway to be heaviest early in the year. The first quarter typically accounts for a third of a year’s lending. Only 42% of the new loans in the first week of January were extended by the big four state-owned banks, indicating the weakening power of centrally set quotas to control monetary policy. The central bank is increasingly being thrown back onto raising interest rates and reserve requirements to rein in liquidity. More of both to come.