China bank lending accelerates in May

Beijing said bank lending and the money supply were above expectations in May.

Chinese financial institutions issued loans amounting to US$125.6 billion in May, up 15% compared to US$107 billion in April, said the People’s Bank of China, the central bank.The figure is also a 15.7% rise from year-on-year.

Money-supply growth, as measured by M2 grew 13% in May from April’s 12.8% gain. On the other hand, M1 grew 3.5% in May from a 3.1% growth in April.

Households and corporations showed a strong appetite for medium and long-term loans, indicating that Beijing’s policy easing was beginning to take effect.

Medium-to-long-term loans accounted for a rising share of total lending indicating that some commercial banks were more willing to finance existing or recently approved investment projects.

Analysts believe these are likely early signs of policy easing becoming more effective, and this could probably lead to investment growth in the next two to three months.