Economy

7.5t yuan of credit supply targeted in 2010

(Xinhua)
Updated: 2010-01-20 16:47

HONG KONG: Authorities have set the target for the credit supply in China in 2010 at roughly 7.5 trillion yuan ($1.1 trillion), said Liu Mingkang, chairman of the China Banking Regulatory Commission.

Speaking at the Asian Financial Forum here on Wednesday, Liu said regulatory authorities would continue to control the pace and amount of credit supply this year.

"Though the first few days of January this year witnessed a relatively strong and quick lending momentum, that is because of the lagging effect of last year's credit buildup," he said.

"Such trend will definitely be eased as the effective demand is satisfied," he added.

Credit supply in China totaled about 9.5 trillion yuan ($1.4 trillion) in 2009, with monthly bank lending averaging 1.52 trillion yuan ($222.5 billion) in the first quarter but falling back gradually to normal levels in the following quarters.

Credit played a primary role in supporting the massive infrastructural investment. Rapid credit buildup also stabilized the market confidence, eased liquidity stress and boosted the economy, Liu said.

Liu said prudential measures were taken at the credit hike in the first quarter of last year, adding that regulatory authorities had asked banks to heighten their vigilance against any possible embedded credit risks.

Liu said he expected challenges for the Chinese banking industry in 2010.

"The year 2009 might be the most difficult year of the Chinese economy. 2010 could be the most complicated year with uncertainties," he said.

Nevertheless, Liu said he did not expect the exit strategy to be a huge challenge for China because no money had been spent to rescue the financial industry.

"The real challenge facing China and other Asian economies is how to readjust their structure," he said.