Money

China won't set clear loan target this year

(Agencies)
Updated: 2011-01-06 10:42

BEIJING - China will not set a clear lending target for banks this year, instead guiding the flow of credit based on observations about the broader economy, an official newspaper said on Thursday.

Citing an unidentified source, Shanghai Securities News reported that officials would consider both economic growth and the level of inflation in overseeing bank lending.

"Of these, economic growth will be the main indicator for observation," it said in a front-page article.

Related readings: China to keep new loan target unchanged  Curbing loan growth proving tough task for PBoC  China loan growth of 15% enough - PBOC adviser

In past years, a target for credit issuance has been a centerpiece of China's economic policy, even if banks have often wound up overshooting it.

With the country facing accelerating inflation, there had been much speculation that Beijing would set a lower lending target in 2011 after last year's 7.5 trillion yuan ($1.1 trillion) aim.

But there had also been reports in recent weeks that the central bank and the National Development and Reform Commission, a top planning agency, were divided over the exact amount.

The central bank was eyeing a reduction to 6.5 trillion yuan, while the economic planner was pushing for it to remain steady at 7.5 trillion yuan, according to local media.

The absence of a firm lending target could give Beijing more wiggle room to adjust policies later in the year, when it will become clearer whether inflation or a growth slowdown poses a greater risk for the world's second-largest economy.