China 2011 lending quota may stay at 2010 level

Wednesday, 15 December 2010 00:01 -     - {{hitsCtrl.values.hits}}

SHANGHAI (AFP) - China is likely to keep its 2011 lending quota at around 7.5 trillion yuan (1.1 trillion dollars), unchanged from this year’s target, state media reported Tuesday.

Beijing said this month it would move from a “relatively loose” policy to a “prudent” one as consumer price growth accelerated to 5.1 percent in November, its fastest in more than two years.

Reining in lending had been seen as one tool at Beijing’s disposal for curbing inflationary pressures.

But the China Securities Journal, citing unnamed sources, reported that supporting economic growth remains the primary aim for next year’s monetary policy.

“China’s economy is very large and the credit growth of 7.5 trillion yuan will not trigger all-round inflation”, the sources told the newspaper, adding inflation was expected to peak in the second quarter of 2011.

“Policies in the coming three to six months will be curbing inflation, but the inflation pressure will not be as big as expected,” the sources were quoted as saying.

The 2011 lending target for the world’s second-largest economy has yet to be finalised, the report said.

China’s leaders have pledged to ensure “stable and healthy” economic development in 2011, according to an statement released after the annual Central Economic Work Conference, which drafts strategies for the coming year.

The growth in M2, the broadest measure of money supply, will be lowered to 16 percent, down from 17 percent this year, the report said.