China may abandon lending target

After previous quotas have been ignored by banks, China may not announce an official target for credit growth this year, economists say.

 

To avoid embarrassment and shore up their often-wobbly credibility, Chinese authorities may not set new lending targets for banks this year after previous quotas have either been ignored or proved to be inadequate.

China did not officially issue a 2011 lending target after the previous ones were circumvented by banks. However, the central bank will still restrict lending from behind the scenes and set different RRRs required reserve ratios for different banks in order to better moderate the lending spree, said Shuang Ding, senior China economist at Citi.

Chinese banks issued Rmb7.95 trillion $1.2 trillion of new loans in 2010, according to the People's Bank of China PBoC, exceeding Beijing's...

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