China revealed today that Chinese banks issued new loans in the amount of 7.95 trillion yuan ($1.2 trillion) in 2010, exceeding the government’s target of no more than 7.5 trillion yuan. At the same time, a record $199 billion surge in foreign exchange reserves in the fourth quarter pushed China’s stockpile, already the world’s biggest, to $2.85 trillion, highlighting that money streaming in from abroad was complicating policy efforts at home.
“Lending is still excessive and China’s process of monetary normalization has not finished yet,” said Wu Tujin, economist with Guosen Securities in Shenzhen. “That means China will still face high pressure from inflation and asset bubbles.”
Source: Reuters