A draft of the new rules that would regulate surging bank lending is being circulated internally for comment at the China Banking Regulatory Commission, the Wall Street Journal reported, citing sources familiar with the matter. The banking regulator wants to ensure that loans are going to the real economy, such as the government’s stimulus projects, rather than being diverted to the asset market or bank deposits. The surge in bank lending this year has helped buoy markets and consumer confidence in China. China’s banks extended US$640 billion in new loans in the first quarter, almost as much as all lending in 2008 and equivalent to about 70% of first quarter GDP. However, around US$216.5 billion of this lending came in the form of short-term bill financing and analysts say some companies have been borrowing these funds in order to earn interest off bank deposits.