Experts say target hard to meet

By Maggie Zhang  |   2008-12-16  |     NEWSPAPER EDITION

MORE new loans are expected to be granted in 2009 after the State Council, or China's Cabinet, said it aims for a 17-percent growth in money supply, analysts said yesterday, but some added that it may be unavoidable for banks to hold back lending.

China CITIC Securities Co said yesterday that it expects a 16-percent growth on outstanding lending next year based on the central government's 17-percent money supply growth target. The growth will translate into new lending of 4.8 trillion yuan (US$700 billion) next year, according to CITIC Securities.

The State Council said over the weekend that China aims for money supply to expand 17 percent in 2009 to bolster the economy.

"However, analysts said it's unavoidable that banks would hold back their lending.

"It will be difficult to realize the 17-percent M2 growth next year against the slowdown of economic activities and the cautious lending stance from banks. We expect a 14-percent growth," Chen Lu, a Haitong Securities chief economist, said yesterday.

China Merchants Securities said an M2 growth of ''13 to 14 percent will still support the economy to gain by 8 percent next year. When the economy contracts, money supply and credit growth will shrink, so it's really difficult to reach the 17 percent target."