China Construction Bank, the country's second-largest bank, will cut new lending by as much as 70 percent during the July-December period of this year on concerns that its portion of bad loans may rise.
“I feel that some industries are expanding too rapidly. For example, housing prices are rising too fast, and housing sales are growing too fast,” the bank's President Zhang Jianguo told Bloomberg,
He said new loans at his bank should hit $29 billion during the second half of this year.
Loose monetary policy in China has banks lending vast amounts of money.
Overall, Chinese banks lent $1.1 trillion during the first half of 2009, a figure about the same size as India's gross domestic product, fueling fears that hot growth rates will create asset price bubbles.
Not so, Chinese officials say.
They're going to keep the economy in growth mode, however, and that means loose monetary policy and no quotas on bank loans.
“Promoting steady and fast growth will remain the top priority of our economic work,” said Zhu Zhixin, a vice minister at the National Development and Reform Commission, China's top economic planning agency.
“We will continue to implement our active fiscal policy and moderately loose monetary policy” to consolidate “economic stabilization and recovery,” he told reporters at a briefing in Beijing.
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