CHINA / National
Citizens less into saving, more into borrowing
By Sun Min (China Daily)
Updated: 2006-06-15 06:24
Chinese people, renowned for their enthusiasm in saving cash, are
becoming less enthused and at the same time more willing to borrow money
from banks.
So it would seem from a monthly monetary report from the central bank
yesterday.
The country's outstanding renminbi loans by the end of May stood at 21.16
trillion yuan (US$2.65 trillion), up 16 per cent from a year ago. The
growth was 3.6 percentage points higher than the same period last year
and 0.6 of a percentage point higher than in April.
The steady increase in lending was mainly supported by growth in medium
and long-term loans.
However, it seems people are less willing to save there was only 12.2
billion yuan (US$1.5 billion) of new savings in domestic financial
institutions in May, the lowest monthly increase in almost five years.
The central bank thought the slow-down could be caused by a boom in the
stock market, which staged an upturn from a bear market over the past few
months and diverted some of the cash intended for savings accounts.
China's M2, the broader measurement of money supply, rose by 19.1 per
cent to 31.67 trillion yuan (US$3.96 trillion) by the end of last month
compared to a year ago.
The People's Bank of China had warned of excessive lending and investment
growth in its first quarter monetary report issued two weeks ago. It also
raised the benchmark lending rate on April 28 to curb loans for
investment projects, but chose to keep the official deposit rate
unchanged to discourage savings.
Zhu Jianfang, an analyst with CITIC China Securities, said the investment
growth might be more moderated in the second half of the year if
tightening measures start to take effect, but the growth so far is still
"acceptable."
Moreover, consumption demand is strong both within the country and
overseas, said Zhu. The trend of solid consumption growth will be
maintained, the expert said.
China's retail sales reported stronger-than-expected growth in May,
rising 14.2 per cent year-on-year to 617.6 billion yuan (US$77.2
billion), according to the National Bureau of Statistics on Tuesday.
Meanwhile, the renminbi exchange rate remained basically stable last
month.
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