Chinese bank lending surged in the first week of 2010, industry sources said today, adding to the concerns fuelled by blockbuster trade data for December that the world's third-largest economy is overheating.
Despite the indications of gathering economic momentum, finance minister Xie Xuren said China would stick to its pro-growth fiscal stance, warning that withdrawing stimulus spending too early could damage the economy.
New loans amounted to about 600 billion yuan ($88 billion) in the first week of January, nearly twice as much as the monthly average in the second half of 2009, banking sources said, confirming a media report earlier.
The lending news came a day after trade figures showed much stronger-than-expected growth in both imports and exports. The strong economic signs pushed up Asian stocks to a 17-month high today and helped to lift oil prices to the highest level since October 2008.
China, long known as the factory floor of the world, also beefed up domestic consumption last year and became the world's largest car market. Passenger car sales rose 52.9 per cent to 10.3 million units in 2009, with sales surging 88.7 per cent in December from a year earlier, the China Association of Automobile Manufacturers said.
The record bank lending in 2009 fuelled a mass of liquidity in the financial system.
Policymakers have been trying to remove excess cash and stamp out speculation in the property market, but have been wary of removing government support at the current stage of the economic recovery.
"In 2010, active fiscal policies will continue, and this means we cannot weaken the intensity of fiscal support for economic development, avoiding the losses to our achievements that would come from an excessively early exit", finance minister Xie was quoted as saying by the official Xinhua news agency.
Financial markets reflected bets Beijing would let the yuan, held steady against the dollar since the middle of 2008 to help the economy, rise in the face of inflation pressures.
Dealers today priced in expectations in the offshore market for appreciation of as much as 3.7 per cent in a year compared with 3.3 per cent on Friday.
As the world hurtled into the financial crisis, Beijing produced a 4 trillion yuan stimulus package in late 2008 focused on generating more domestic demand.
These efforts appeared to be bearing fruit at a faster pace than many economists had expected, suggesting that officials may have to move relatively quickly to rein in lending and investment.
The trade figures yesterday showed that imports in December jumped 55 per cent to $112.3 billion from a year earlier. Exports grew 17.7 per cent to $130.7 billion.
Sequential growth figures were robust, implying that the stunning year-on-year gains reflected strong momentum and not just the comparison with weak figures in December 2008.
Even after seasonal adjustments, month-on-month export growth in December was 5 per cent and import growth 8.7 per cent, China's customs administration figures showed.
Reuters