Central bank required to ensure steady credit growth
The State Council, the country's cabinet, announced Thursday a batch of measures to reduce the high financing costs for enterprises。
The People's Bank of China, the central bank, needs to continue a stable monetary policy to maintain the credit growth appropriately, according to a statement released by the State Council on its website Thursday。
The central bank was also required to further carry out the policy of targeted reserve requirement ratio cuts。
The statement came after central bank data on Wednesday showed a plunge in total social financing and new loans in July。
There was surprise at the total social financing aggregate, a broad measure of liquidity in the economy, which was only 273.1 billion yuan ($44.38 billion) in July, the lowest since October 2008 and far below the 1.97 trillion yuan of the previous month, according to data released by the central bank。
The extent of the slide in the amount of credit extended by banks in July was also unexpected. New yuan loans came in at 385.2 billion yuan in July, well below 1.08 trillion yuan the month before, the central bank statistics said。
A slowdown of economic indicators released by the National Bureau of Statistics Wednesday also pointed to a fragile recovery. Urban fixed-assets investment, a significant engine of economic activity, came in short of expectations to register a 17 percent gain in the first seven months over the same period last year, cooling from a 17.3 percent rise in the first half of the year, while retail sales rose by 12.2 percent in July, slightly below forecasts。
In face of the downside in new loans and total social financing, as well as the econo-mic slowdown, analysts generally expect that more policy easing is unavoidable if the -government wants to achieve its growth target。
But monetary policy loosening alone can not resolve financing difficulties for the enterprises and comprehensive measures are needed, analysts believe。
In addition to maintaining the stable monetary policy, the State Council required the central bank and the China Banking Regulatory Commission (CBRC) to simplify procedures of lending to enterprises。
The CBRC has been asked to set up more small and medium-sized financial institutions to support the development of micro enterprises and the agricultural sector。
The State Council also suggested interest rate liberalization to improve the financial institutions' corporate governance。
