SHANGHAI: China’s bank lending picked up in June from May, the central bank said on Tuesday, as authorities accelerated infrastructure investment to boost the flagging economy, but analysts warned of a possible debt bubble.
Domestic banks granted 1.08 trillion yuan ($174 billion) in new loans for June, up from 870.8 billion yuan a month earlier, the People’s Bank of China (PBoC) said in a statement.
The June figure beat an average forecast of 980 billion yuan, according to a poll of 20 economists by the Wall Street Journal.
China has in recent months rolled out a “mini-stimulus” package, including targeted monetary easing and speeding up infrastructure spending, to spur economic growth.
However, China Merchants Bank analyst Liu Dongliang wrote in a research note: “On the positive side, the massive scale of credit… should provide a solid foundation for an economic recovery.
“But the overly fast growth in June loans may result in excess capacity and inflated debt bubbles.”
He added that the central bank could even tighten monetary policy in the third quarter if such risks arise.
China’s economy expanded 7.7 percent in 2013, the same as 2012 — the worst pace since 7.6 percent in 1999. China’s official growth target for this year is 7.5 percent, also the same as last year’s.
Gross domestic product (GDP) grew 7.4 percent in the first quarter of this year.
The median forecast in a survey of 17 economists by Agence France-Presse predicted that the economy again grew 7.4 percent in the April-June period. China announces second-quarter GDP data on Wednesday.
The PBoC said total social financing—a broader measure of credit—was 1.97 trillion yuan in June, up from 1.40 trillion yuan in May.
“Shadow banking activities continued to shrink and bank lending has returned as the key source of corporate financing,” ANZ Bank said in a research report.
Authorities have sought to crack down on “shadow banking”—a huge network of lending outside formal channels and beyond the reach of regulators, including activities by online finance platforms, credit guarantee companies and microcredit firms.
Separately, China’s foreign exchange reserves reached $3.99 trillion at the end of June, up from $3.95 trillion as of end-March, according to the cen- tral bank.
ANZ described the rise in reserves as “generally stable” and the smallest increase since the fourth quarter of 2012.