PBoC's Targeted Approach Addresses Credit Risks: Capital Economics

(RTTNews) - The current targeted approach of the People's Bank of China remains consistent with its goal of keeping borrowing costs low and also addresses credit risks and slowing the pace of credit growth, Julian Evans-Pritchard, an economist at Capital Economics, said.

Data from the People's Bank of China released Friday showed that Chinese banks lent CNY 548.3 billion in October compared to CNY 857.2 billion in September. It was also below CNY 626.4 billion lending expected by economists.

Total social financing came in at CNY 662.7 billion in October, down from CNY 1.05 trillion seen in September. M2 broad money supply growth eased to 12.6 percent in October from 12.9 percent a month ago.

New rules preventing banks from window dressing their deposit figures, which were rolled out in mid-September, are helping to keep lending growth in check, the economist said.

The economist noted that despite liquidity injections by the PBoC, which helped to keep interest rates relatively low, tougher regulatory oversight has ensured that growth in overall outstanding credit continued to slow.