China says June bank lending doubles from May

China's bank lending in June more than doubled from the previous month as Beijing's stimulus drove a surge in credit that has prompted concern about the possible impact of such a rapid increase.

China’s bank lending in June more than doubled from the previous month as Beijing’s stimulus drove a surge in credit that has prompted concern about the possible impact of such a rapid increase.

Chinese banks lent 1.5 trillion yuan ($220 billion) in June, the central bank reported on its Web site today. That exceeded forecasts and was up from May’s 665 billion yuan ($97 billion) in lending and April’s 590 billion yuan ($86 billion).

Economists see the surge in lending as a sign of a nascent economic revival as Beijing tries to shield China from the global slump with a 4 trillion yuan ($586 billion) package of spending on public works construction and other projects.

A large portion of that spending is expected to be financed by China’s state-owned banks. The latest figure would push total bank lending for the first half of the year to 7.3 trillion yuan (just under $1.1 trillion).

The boom has helped to revive investor enthusiasm and propel a rise in China’s stock markets. The benchmark index for the country’s main exchange in Shanghai hit a 13-month high on Monday before subsiding slightly.

Some Chinese analysts and officials including the central bank governor have warned of possible problems including a bubble in stock and real estate prices or a rise in bad loans if banks are not careful about where their lending goes.

The government has not officially expressed concern but warnings about possible misuse of money for stock speculation and other purposes are appearing in the Communist Party newspaper People’s Daily and other official media.

The lending has helped to drive a rebound in economic growth, which fell to 6.1 percent for the first quarter of the year.

A central bank researcher, in an article in the July issue of the bank’s magazine, China Finance, said growth might exceed 7.5 percent for the second quarter and should meet the government target of 8 percent for the year. Private sector forecasts of second-quarter growth range from 6.8 percent to 8 percent.

Quarterly data are due to be announced next week.

The World Bank raised its 2009 growth forecast for China from 6.5 percent to 7.2 percent last month. Private sector economists have raised their 2009 forecasts to between 6.8 percent and 8.5 percent.

Premier Wen Jiabao and other Chinese leaders have said the stimulus is starting to show positive results, though they say the economy is still vulnerable to global conditions. They have warned against complacency.

___