China has not decided to quicken lending: report - Reuters

BEIJING | Thu May 31, 2012 11:12pm EDT

BEIJING (Reuters) - China has not told banks to speed up lending and will set credit policy in line with economic conditions, a vice chairman of the country's banking regulator said in remarks published on Friday, as fresh data raised fears that business activity may be cooling faster than expected.

China has increased its policy emphasis on supporting growth recently, fast tracking infrastructure investment and providing subsidies for consumption, fuelling speculation that Beijing may be eyeing another fiscally-led lending spree, like the 4 trillion ($635 billion) stimulus adopted to combat the last global financial crisis.

"The China Banking Regulatory Commission has always been doing what it is told to from above. We are all still watching changes and there is no conclusion yet," CBRC vice chairman Cai Esheng said, when asked if China would relax mortgage policies.

China tightened housing policies after the last stimulus program triggered frenzied real estate speculation that drove home prices well beyond the reach of ordinary working citizens.

Housing costs have eased slightly since, but remain elevated and government leaders repeatedly insist there will be no easing of the tightening policy until prices return to what are described as "reasonable levels".

Whether the regulator will increase the credit quota and accelerate the pace of lending depends on changes in the economy, the Securities Times cited Cai as telling a forum.

He added that the CBRC's main objective was to watch bank behavior and support the state's macroeconomic policy as well as the central bank's monetary policy.

China's central bank is scheduled to announce money supply and new lending data for May from June 10 onwards.

China's official purchasing managers' index fell more than expected to 50.4 in May, the weakest reading this year and down from April's 13-month high, in the latest sign that output in the world's second-biggest economy is cooling.

(Reporting by Langi Chiang and Nick Edwards; Editing by Kim Coghill)

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