China's August lending tops market expectations

China's bank lending quickened to 548.5 billion yuan or $86 billion in August, topping market expectations of 500 billion yuan and rebounding from July's seven-month low.

"August lending was stronger than expected, but it's too early to say that the central bank is ready to relax," E Yongjian, an economist with the Bank of Communications in Shanghai, said.

"As inflation is relatively high and the external environment remains uncertain, the central bank is expected to maintain its current stance, and is unlikely to take any big moves like an increase in interest rate or the required reserve ratio," he added.

Bank lending is a focal point in China's monetary policy since Beijing controls it through loan quotas to manage economic growth and control inflation.

A rising portion of lending and fund raising activities are happening outside Chinese regulator's purview, through off-balance-sheet bank lending and informal loans offered by cash-rich people.

"Banks were urged to move some of their off-balance sheet lending onto their loan books, which may have inflated the August loan data," Hua Zhongwei, an analyst with Huachuang Securities in Beijing, said.

Hua added that the PBOC has remained in tightening mode while still encouraging lenders to grant more loans sectors like small businesses.

The full story is available at Reuters.