China lending, money supply growth exceed economists' estimates

BEIJING: China's lending and money supply growth in December exceeded economists' estimates after regulators reduced the reserve requirement for the nation's banks for the first time since 2008.

New loans in December totaled 640.5 billion yuan ($101 billion) for the month, compared with the 575 billion yuan median estimate of 18 economists surveyed by Bloomberg. M2, a measure of money supply, rose 13.6%, compared with the 12.9% median of 18 economists' estimates.

Premier Wen Jiabao last week pledged to fine tune monetary policy as needed to preserve growth as he warned that business conditions in the first quarter may be "relatively difficult." The People's Bank of China reduced the reserve requirement for lenders from December 5 as Europe's debt crisis eroded demand for Chinese goods and inflation moderated in November to the slowest pace in 14 months, reducing the need to limit lending.

"Typically by the end of the year, the monetary authorities are in tightening mode, but this year is the opposite," said Ken Peng, a Beijing-based economist at BNP Paribas SA. "We've tightened too much earlier in the year and now we're relaxing."

The statement posted to the central bank's website today didn't contain a figure for China's foreign-exchange reserves, which are usually released with lending and money supply data issued at the end of each quarter.

Annual lending for 2011 totaled 7.47 trillion yuan, according to the statement.