China eases credit flow to fight slowdown

The mainland authorities appear to have boosted credit supply amid slowdown fears, with data showing yesterday that banks extended more loans last month than in April.

New loans amounted to 870.8 billion yuan (HK$1.08 trillion), compared with 774.7 billion yuan in April, the People's Bank of China said.

The broad gauge of money supply, M2, rose 13.4 per cent from a year earlier, faster than the 13.2 per cent gain in April.

The increase in credit, although still moderate, comes on the heels of the government asking banks to step up support for the country's vulnerable sectors, such as smaller and rural businesses.

Beijing has, however, refrained from wider easing to avoid fuelling financial risks.

At a recent meeting, Premier Li Keqiang warned provincial leaders about the dangers of missing the economic growth target, set at "about 7.5 per cent" for this year, urging them to ensure central policies are well executed. He also asked ministries to tackle problems such as slowing investment and tight credit.

The economy expanded 7.4 per cent in the first quarter from a year earlier, the slowest in six quarters.