China's looser lending controls introduced in August saw yuan-denominated bank loans rise for the second consecutive month in October as the economic growth weakened.
The People's Bank of China (PBOC) announced on Wednesday that outstanding loans hit 29.83 trillion yuan (US$4.37 trillion) by the end of October, up 14.58 percent from the same month last year.
The increase was 0.1 percentage points higher than the previous month.
Last month saw 181.9 billion yuan in loans, 45.7 billion yuan more than October last year, reflecting the easing of credit policy, said analysts.
On Aug. 5, the central bank raised the 2008 credit quota by 5 percent for national commercial banks and 10 percent for local commercial banks to ease the financing difficulties of small and medium-size enterprises.
The PBOC decided to scrap enforced restrictions on the scale of bank credit to ensure steady and fast economic growth on Nov. 3.
Liu Yuhui, director of China's economy evaluation center of the Institute of Finance and Banking of the Chinese Academy of Social Sciences (CASS), said loans would likely continue to increase in the wake of the government's stimulus programs.
However, he expressed concern over private sector spending as these investments affected economic growth.
Mortgages in October stood at 4 billion yuan, 64.2 billion yuan less than the same period last year.
Zhang Bin, researcher at the Institute for Finance and Trade Economics of CASS, said people had a "wait-and-see" attitude towards home purchases as prices continued to fall.
The central bank also announced money supply growth declined for the fifth consecutive month in October.
The broad measure of money supply, M2, which covers cash in circulation plus all deposits, reached 45.31 trillion yuan, up 15.02 percent.
The increase was 0.27 percentage points lower than the previous month.
Zhang said the slower growth indicated commercial banks' worries over the economic outlook.
The narrow measure of money supply, M1, hit 15.72 trillion yuan, up 8.85 percent. The increase was 0.58 percentage points down from September.
Liu said the falling M1 growth in October reflected falling company profits.
(Xinhua News Agency November 13, 2008)
