chinese bank lending

Interesting read about growth and Chinese banks from the Australian.

CHINA'S manufacturing activity grew at a relatively rapid pace in January, two new purchasing-managers’ indexes showed, indicating recent government efforts to curb booming bank lending have had limited impact on economic output.

The HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, rose to a record high of 57.4 in January from 56.1 in December, HSBC Holdings said today.

A separate index, issued by the China Federation of Logistics and Purchasing and the National Bureau of Statistics, was 55.8 in January, indicating the eleventh straight of growth in China�s manufacturing activity.

For both surveys, a PMI reading above 50 indicates growth relative to the previous month, while a reading below 50 indicates contraction.

The government PMI reading was below December's level of 56.6, making it the second-highest level for the index since activity began slowing in May 2008.

China poured stimulus funds into the economy last year to promote growth. But last month, authorities started taking measures to reduce lending amid fears that excessive credit was fuelling asset bubbles and could trigger inflation.

And Chinese banks, almost all of which are majority-owned by the government, suspended lending through the end of January at some of their branches. Those moves roiled global financial markets, as investors worried about a possible slowdown in China, the world's fastest growing major economy.

Said UBS Securities China economist Wang Tao: Even if new yuan loans were under control, liquidity in China's real economy still remained ample last month, which supported the manufacturing activity.

Ms Wang said she expected the central bank to tighten further in the coming months, but added that lending would still be sufficient to support strong economic growth this year, which she forecast to be near 9 per cent.

Of the government PMI's 11 categories, six rose and five fell in January, compared with December. Among the key sub-indexes, new export orders and imports grew, while employment fell; all remained above the expansionary threshold of 50, according to the data.

Zhang Liqun, an analyst for the China Federation of Logistics and Purchasing, pointed to continued risks in the economy. China's economy is at a key stage of stabilising the economic recovery," Mr Zhang said in a statement.

Exports' positive role in the economic growth will strengthen, but higher costs and more fierce market competition may make the development environment for companies more severe.

http://www.theaustralian.com.au/business/news/china-factory-output-index-records-11th-straight-month-of-growth/story-e6frg90x-1225825564893