China may cap loan growth at 15% next year

Xia Bin, an advisor to the People’s Bank of China (PBoC), said that China’s bank lending should grow by around 15% in 2011 to support the economy, Reuters reported. The recommendation strengthens many economists’ suspicions that the central bank will restrict loan growth in 2011 in a bid to limit credit expansion and dampen rising inflation. Regulators are currently grappling with how to manage the country’s banks as they approach the 2010 target of US$1.1 trillion in new lending. On Wednesday Hu Xiaolian, deputy governor of the PBoC, said that the central bank would work with banks to keep lending at a manageable level for the rest of the year. Uncontrolled lending could further exacerbate inflation, which reached 4.4% year-on-year in October.