China bank lending nearly doubles in March

BEIJING (AFP) - Chinese banks in March lent nearly twice as much money as in February, official data showed on Thursday, as Beijing beefed up efforts to bolster a faltering economic recovery.

Banks granted a total of 1.06 trillion yuan (S$212 billion) in new loans last month, up from 620 billion yuan in February, the central People's Bank of China said in a statement.

Total social financing, a broader measure of credit, surged to 2.54 trillion yuan, it said, more than doubling from 1.07 trillion yuan in February, although that month had fewer working days because of the Lunar New Year holiday.

The figures came after official inflation and foreign trade data for March released this week indicated recovery in the world's second-largest economy has remained fragile.

"With the supportive monetary policy, we expect growth to regain its rising momentum in the second quarter after a pause in the first quarter if the ongoing bird flu won't turn much uglier," analysts at Bank of America Merrill Lynch said in a report, referring to the H7N9 illness that has killed nine people.

But they cautioned the strong rebound in lending last month could again fan fears on inflation, property bubbles and government debt, which could trigger monetary tightening.

"China's monetary policymakers are in a tough position to balance short-term growth stability, market worries, and long-term economic health," they said.

The Chinese economy grew 7.8 per cent last year, its slowest pace in 13 years, due to the global downturn and domestic woes.

An acceleration in the final three months of last year to 7.9 per cent, which snapped seven straight quarters of slowing growth, had raised recovery expectations among economists.

However, the consumer price index - a main gauge of inflation - in March rose 2.1 per cent year-on-year, down from 3.2 per cent in February, suggesting consumer spending remained sluggish.

Adding to concerns on the country's economic outlook, the world's top exporter recorded a rare trade deficit last month as external demand, particularly in Japan and the debt-laden eurozone, remained weak.

The government is slated to announce China's gross domestic product growth for the first quarter on Monday.

Join ST's Telegram channel and get the latest breaking news delivered to you.