China to set $1trn target for new loans in 2011

China’s bank lending target for 2011 is likely to be at least US$1.05 trillion, suggesting that any clampdown on lending growth will not be so severe, Bloomberg reported, citing two people briefed on the matter. The government planned for US$1.13 trillion in new loans in 2010, but this ceiling was almost breached in the first 11 months of the year. It has responded to inflationary pressure by reining in credit growth recently, raising banks’ required reserve ratio three times in five weeks. Economists at UBS (UBS.NYSE, UBSN.SIX) and Bank of America Merrill Lynch (BAC.NYSE, 8648.TYO) had earlier predicted a new lending target of US$975 billion to US$1 trillion for 2011. According to one estimate, actual lending for 2010 may reach as high at US$1.35 trillion when off-balance sheet credit and short-term financing bills that get converted into loans are included. Beijing is also said to be targeting 4% inflation, 8% GDP growth and 16% money supply expansion in 2011.