Slowdown in lending shows the government's credit curbs are starting to bite The Bank of China halved its lending to overheated sectors of the economy last month in line with the government's policy of restraining loan growth. Loans to five industries, which the bank did not specify, fell by 48 per cent in May compared to April, a statement on the bank's website said. The bank said its yuan lending growth slowed markedly during the first five months of this year, rising by 132.2 billion yuan from the end of last year, to 1.46 trillion yuan at the end of May. The increase was 50.3 billion yuan lower than in the same period a year ago. The slowdown in lending at the country's second-largest bank shows the government's tighter control over credit is beginning to filter through the banking system. On Friday, the People's Bank of China (PBOC) left interest rates unchanged at its second quarterly meeting, saying the government's broader macroeconomic policies were starting to succeed in clamping down on runaway growth. PBOC officials have said they will see whether recent policy measures have taken hold before deciding whether to raise interest rates for the first time in almost nine years. These measures include ordering banks to reduce loans to the steel, construction and property sectors, and twice increasing the reserve ratio, or the amount of money banks must keep on hand. Last month, the mainland's consumer price index rose by 4.4 per cent from a year earlier, the fastest growth in seven years. Most economists are expecting the PBOC to raise interest rates in the second half of the year, possibly as early as next month. Apart from examining domestic economic indicators, some economists believe the mainland will pay attention to the United States' policy on interest rates. However, HSBC economist Qu Hongbin has said the government will not just rely on interest rates to restrain growth.