China’s giant $585 billion (RMB4 trillion economic stimulus package is showing signs of taking effect.
Economists now project that China will be the likely leader of an elusive worldwide economic recovery.
Chinese banks heeded the government’s call to extend more credit to support the economy as they issued $237 billion (RMB1.62 trillion) in new loans in January, up a whopping 101% year-over-year, the People’s Bank of China said. The surge provides evidence that state-owned banks are heeding the government’s call to extend more credit to support the economy.
Seeking Alpha reported ‘The banks are fighting for the best projects in the government’s stimulus package,’ Ha Jiming, chief economist of China International Capital Corp, told China Daily. “It’s not surprising to see that an array of the deals were sealed in the past month.’
The massive jump in lending is equal to about one-third of the loans issued in all of 2008, prompting some economists to say the government might discontinue cutting interest rates.
‘The bank lending figures are just a stunningly good piece of news for China,’ Glenn Maguire, chief Asian economist for Societe Generale in Hong Kong, told Reuters.
Now, it looks like the lending is spurring China’s turnaround.
China is trying to recover from an economic slide that forced it to shed 20 million jobs, as exports dropped and the real estate market slumped. Spending on roads, railways and housing has increased prices for iron ore and other commodities, and helped drive the record number of new loans in January.