Banking

PBOC cuts 2011 banks' lending target

By Soo Ai Peng and Aileen Wang (China Daily)
Updated: 2011-01-19 11:19

BEIJING - The People's Bank of China (PBOC), the nation's central bank, is reported to have cut its 2011 lending target for banks by 10 percent from last year in a bid to slow free-wheeling lending and tame inflation.

Even though there are widespread expectations that China will not publicly issue a target for 2011 lending after similar instructions were ignored by banks in 2010, many analysts believe the central bank will still restrict lending from behind the scenes.

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China's Securities Journal reported on Tuesday that the central bank has reduced the target for bank loans by as much as 10 percent from the value of loans handed out last year.

That means banks can lend between 7.2 trillion yuan ($1.09 trillion) and 7.5 trillion yuan this year, it said.

It is unclear if the target will be officially announced by the central bank, or if it will simply serve as guidance to banks on how much they should lend.

It is customary, for instance, for China's banks to seek approval from the central bank for their individual annual loan targets at the start of each year.

But data which showed China drew a record amount of foreign investment in December, and for all of 2010, underscored the difficulties the nation faces in draining its economy of an abundance of money that is helping to fuel inflation.

Reuters