Loans to Chinese property developers surge in first quarter

PUBLISHED : Wednesday, 29 April, 2015, 2:00am
UPDATED : Wednesday, 29 April, 2015, 2:00am

Loans to Chinese property developers surged again in the first quarter despite the country's housing downturn, official data showed, a sign that the authorities were exhorting banks to do more to support the cooling property market.

Banks' loans to property developers leapt 24.1 per cent to 6.08 trillion yuan by the end of March, central bank data showed on Friday, picking up from a rise of nearly 23 per cent in the period last year.

Growth in loans to build public housing was even stronger. They shot up 64.3 per cent in the first quarter to 1.28 trillion yuan, faster than 57 per cent last year.

Brisk lending to real estate developers contrasts with subdued property investment, which cooled to a six-year low in the first three months, as developers focused on selling a large inventory of unsold homes.

Lending to the farm sector and small and micro-sized firms - to which the authorities have tried to channel more loans - was also muted, suggesting limited success for official efforts to encourage more investment in these areas.

Loans to small and micro-sized firms climbed 16 per cent to 15.9 trillion yuan by the end of March, up 0.5 percentage point from the same time last year.

Lending to agricultural businesses rose 8.5 per cent to 3.46 trillion yuan by the end of March, slowing from last year's 9.7 per cent increase.

Worried about China's slowing economy and steep borrowing cost, the central bank has twice cut interest rates and twice lowered the amount of reserves banks must hold, in the five months since November.

Banks that lend more to agricultural businesses and small- and medium-sized companies have enjoyed bigger reductions in reserve ratios in the past year, as part of the government's attempts to increase productive investment.