Lending by Chinese banks surged by far more than expected in September, with 1.05 trillion yuan ($165.47 billion) in new yuan loans extended following moves to stop the economy slowing by cutting interest rates and prioritising infrastructure projects. China's bailout of its ailing stock markets distorted lending figures in recent months, but a jump of about 30 percent in new loans in the January-September period from same nine months a year ago showed how the government was trying to steady a slowing economy.
Economists polled by Reuters had forecast new yuan loans would rise to 885.5 billion yuan in September from 809.6 billion yuan in August. In a bid to stoke activity, the central bank has cut interest rates five times since November, and lowered the amount of cash that the banks must hold as reserves. The latest cut in interest rates and banks' reserve requirements came on August 25.
Other policy measures have included fast-tracking infrastructure investment to cutting down payments for some first-time home buyers and pushing ahead with financial reforms. "While this points to better financing conditions in the economy, it must be remembered that monetary statistics have always came out with encouraging numbers after an easing move but remain dispirited thereafter - which is a clear indication that there are ongoing problems on the demand side, rather than the supply side," said Chester Liaw, an economist at Forecast Pte Ltd in Singapore.
New loans totalled 9.9 trillion yuan in the first nine months, including 1.48 trillion yuan in July - the highest monthly reading since 2009 as the government pumped billions into equity markets to avert a full-blown crash. New loans were 9.78 trillion yuan in the whole of 2014. "This shows that monetary policy is already loose and room for further easing is limited," said Lin Hu, an economist at Guosen Securities in Beijing. "Fiscal policy may play a more active role," he said.