BEIJING (Reuters) - Chinese banks lent a much stronger-than expected 1.08 trillion yuan (S$215.9 billion) worth of new yuan loans in June as Beijing steps up efforts to stimulate the world's second-largest economy.
Markets had expected banks to write 915 billion yuan in new loans for the month, up modestly from May.
Broad M2 money supply jumped 14.7 per cent last month from a year earlier, the People's Bank of China said in a statement on its website on Tuesday, also higher than a forecast of 13.5 per cent in a Reuters poll of economists.
"While a fall in short-term lending rates hinted at a higher supply of funds during the month, the money swirling in the market reflects the urgency of the authorities to ramp up economic activity," said Chester Liaw, an economist at Forecast in Singapore.
Outstanding yuan loans grew 14 per cent from a year ago, better than a predicted 13.8 per cent rise.
The central bank also said China's total social financing aggregate, a broad measure of liquidity in the economy, was 1.97 trillion yuan in June versus 1.4 trillion yuan the month before. "We had previous expected aggregate financing to come in much higher, but still the 1.97 trillion yuan printed is a major upside surprise," Liaw said.
The People's Bank of China has pledged to keep credit and money supply growth at a reasonable level to meet the needs of the real economy. It aims for a 13 per cent annual rise in M2 this year.
The strong growth in money supply in June "is an explicit loosening of (monetary) conditions. Some of this is seasonal. At the end of the quarter there was demand for cash. And evidently, the authorities supplied it," said Tim Condon, economist at ING Bank in Singapore.
After a shaky start to the year, China's economy has recently shown signs of steadying as a series of government stimulus measures kick in.
However, many economists stress that the rebound looks patchy and believe more policy support may still be needed to ensure a sustained recovery.
The government is due to release second-quarter GDP growth on Wednesday, along with data on fixed-asset investment for the first half and factory output and retail sales for June.
China's foreign exchange reserves, the world's largest, rose to US$3.99 trillion at the end of June from US$3.95 trillion at the end of March, central bank data showed on Tuesday.
That showed foreign exchange reserves rose by about US$40 billion in the second quarter, slowing from a US$130 billion rise in the first quarter and US$157 billion in the fourth quarter of 2013.
Speculative "hot money" inflows may have eased after suspected central bank intervention earlier this year to weaken the yuan as a means of punishing speculators who were betting on non-stop appreciation of the currency.