China making $800-900 billion more funds available for loans and will cut rates in the first half of 2015

hina Cwill broaden the definition of a deposit in 2015, boosting the lending capacity of Chinese banks that have to cap loans at 75 percent of funds held. The relaxation, reported by the official Xinhua News Agency yesterday, could make an additional 5 trillion yuan ($800 billion) to 5.5 trillion yuan available, according to analysts at Credit Agricole CIB and Guotai Junan Securities Co.

“Beijing is trying to stimulate lending and they are trying not to use strong measures,” said Dariusz Kowalczyk, an economist at Credit Agricole CIB in Hong Kong. “Policy makers across the globe are trying to boost demand by increasing bank lending, especially to businesses, so in this sense China’s efforts to boost lending fit well into the picture.”

The PBOC will lower the benchmark one-year lending rate by 25 basis points to 5.35 percent in the first quarter and by another 15 basis points by the end of June, according to economists surveyed by Bloomberg Dec. 18-23. The central bank may cut banks’ required reserve ratio by a total of 1 percentage point in the first half, the survey found.

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