Nation's social financing expands, says PBOC

Sector's development greatly supports regional economic growth

China's social financing has expanded rapidly in recent years and strongly supported regional economic growth, according to statistics published by the People's Bank of China on Thursday.

In the eastern region, social financing hit 9.04 trillion yuan ($1.49 trillion) in 2013, increasing by 1.39 trillion yuan from 2011. In the central region, it rose by 1.10 trillion yuan to 3.40 trillion yuan. And in the western region, it increased by 1.29 trillion yuan to 3.79 trillion yuan.

The social financing of six major eastern provinces and cities including Shandong, Jiangsu and Zhejiang accounted for nearly 38 percent of the total social financing in China, falling 1.5 percentage points from 2012 and 6.2 percentage points from 2011.

The People's Bank of China statistics revealed social financing is less concentrated in the east and more balanced across regions than before, said an official in charge of the Statistics and Analysis Department of the central bank.

"The figures showed the central and western regions have the fastest-developing economies in China in recent years. In the past, when the central and western regions were economically underdeveloped, many commercial banks used to transfer the deposits they took from these regions to the eastern part of China for better investments," said Wen Bin, supervisor of macroeconomic research at the Bank of China's Institute of International Finance.

He noted that financial institutions have played an important role in supporting the economic development in the central and western regions, which relied on bank loans more heavily than did the eastern region.

In 2013, new yuan loans accounted for nearly 52 percent of the social financing in the central region and about 55 percent in the western region, but less than 50 percent in the eastern region.

Wen said the central and western regions rely more on bank loans because the companies in these regions are not strong enough to be self-reliant and the financial markets are not fully developed. The eastern region, on the contrary, has more varieties of financial institutions. Its enterprises have better productivity and a higher level of technology.

Last year, direct financing, which comprises non-financial corporate bond financing and domestic stock financing, accounted for 13.5 percent of the social financing in the eastern region, according to the People's Bank of China.

Building a system to calculate social financing by region will help strengthen the financial industry's support for the real economy, promote regional economic restructuring, and narrow the regional differences in economic development, said the official at China's central bank.

"By monitoring the statistics, we will detect the problems and risks in regional financial development. For example, if non-financial institution loans take a large proportion of the social financing and expand rapidly in some regions, we will pay close attention to possible financial risks," said the official.