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China's credit growth surges as interest-rate cut spurs lending

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China's broadest measure of new credit exceeded economists' estimates in December, signaling government efforts to spur lending have started to take effect.

[BEIJING] China's broadest measure of new credit exceeded economists' estimates in December, signaling government efforts to spur lending have started to take effect.

Aggregate financing in December was 1.69 trillion yuan (US$273 billion), the People's Bank of China said in Beijing today, topping the 1.2 trillion yuan median estimate in a Bloomberg survey. New local-currency loans were 697.3 billion yuan, and M2 money supply grew 12.2 per cent from a year earlier.

China's central bank has been injecting liquidity and cut one-year lending and borrowing interest rates for the first time in two years in November. Today's data indicate such efforts have begun to translate into a pick up in lending.

"Cutting the reserve requirement immediately is unlikely," Lian Ping, chief economist at Bank of Communications Co, said before today's data release. "In 2015, monetary policy needs to find a balance between stabilizing growth, reducing risks and deleveraging." New yuan loans, which measure new lending minus loans repaid, compared with economists' median estimate of 880 billion yuan and November's originally reported 852.7 billion yuan. The M2 figure compared with the median estimate of 12.5 per cent and November's 12.3 per cent.

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Foreign exchange reserves at the end of December were US$3.84 trillion, from US$3.89 trillion at end-September.

Bloomberg

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