The economic recovery in the United States and eased lending standards at US banks are expected to lure capital from the mainland and spur borrowing by Chinese firms abroad. The mainland's slowdown in economic growth and tightening up on loan quality are expected to discourage international investors and speculators from committing funds there and force some Chinese firms to borrow overseas, economists and bankers said. "We will see continued net capital outflows in the third quarter from the mainland as well as from other emerging countries," Ding Zhijie, a finance professor at the University of International Business and Economics, said. "However, it would not be disastrous for China, given its foreign reserves." In the second quarter, the net capital outflow from the mainland was an estimated 47 billion yuan (HK$59.5 billion) amid expectations of economic deceleration and a lacklustre property market. Capital outflows were also encouraged by the US economy's expected further rebound from the 1.7 per cent growth in gross domestic product in the second quarter, Ding said. US banks are easing their lending standards for commercial and industrial loans, commercial real estate loans and other credits, according to the Federal Reserve's survey, released last week, of senior loan officers. In contrast, the mainland government was unlikely to beef up lending substantially this year, the professor said, as banks face increasing bad loans and indebtedness in local governments. Bank of East Asia chief economist Paul Tang Sai-on said the recent recovery, albeit a slow one, in the US economy fuelled higher demand for credit. "Some capital may flow back to the US, because, relatively, there are more investment opportunities over there," he said. "Because of China's structural problem in its economy, which has grown too fast in the past few years, it has to keep tight credit." A corporate lending director with a Hong Kong bank said there were signs of capital outflows to the US from Asia. "US lending has loosened a bit, feeding the demand for trade finance," he said. "Trade finance is a much sought-after area." Despite relatively loose credit in the US, he expected mainland firms to continue to seek loans in Hong Kong rather than the US. Shandong Asia Pacific SSYMB Pulp & Paper, a joint venture by a subsidiary of Singapore-based RGE and Shandong companies, recently signed an agreement to borrow 6.3 billion yuan from its Hong Kong-based holding company for up to 66 months, Shandong's Rizhao branch of the central bank said this month. The holding company obtained financing from banks in Hong Kong, which could save about 400 million yuan in extra interest payments the subsidiary would have to make if it borrowed from banks on the mainland, the central bank said.