Economy

Banks lend less in May as stimulus winds down

(Xinhua)
Updated: 2010-05-28 17:24

BEIJING - Lending by Chinese banks may drop to 600 billion yuan (US$ 88 billion) in May as the central government winds down its stimulus program and cools the property market to prevent the economy from overheating, the Shanghai Securities News reported Friday.

Related readings:  China April new lending top 774b yuan  Mainland developers turn to Hong Kong as lending is curbed  State-owned banks enjoy high lending ability  Banks ramping up agricultural lending this year

A fall in bank lending in May is expected after the government introduced a raft of measures to curb the skyrocketing property market in April. The measures included a ban on lending for third home purchases and increased scrutiny of developers' financing, the report said.

Lu Zhengwei, an economist at Industrial Bank, estimates Chinese banks' May lending will be 450 billion yuan to 650 billion yuan, compared with 774 billion yuan in April.

"China has asked banks to strictly control lending to industries with overcapacity and to stop lending to new projects not in the 4-trillion-yuan stimulus package. These will be major reasons for a drop off in May lending," he said.

China's banks lent 3.37 trillion yuan in the first four months of the year, about 45 percent of the government's full-year 7.5-trillion-yuan lending target.

The National Bureau of Statistics is due to release major economic data for May, including new bank lending, mid-June.