The Big Four Chinese banks ramp up lending in an effort to stave off a further weakening of the Chinese economy.
Industrial and Commercial Bank of China, Bank of China, China Construction Bank Corporation and Agricultural Bank of China together saw their new lending rise US$4 billion from January and February from the previous year.
The People's Bank of China, the central bank, this February reduced the amount of deposits banks must set aside as reserves after new lending in January fell to the lowest for that month in five years.
New lending peaked in 2009 as the government allowed a credit boom to counter the effects of the global financial crisis, raising concerns that asset quality may worsen.
That move has led to an increase in non-performing loans. These loans rose for the first time since late 2008 at the end of the fourth quarter of 2011 to US$68 billion. The bad-loan ratio inched upwards to 1% from 0.9% at the end of the third quarter.
The government is under increasing pressure to loosen lending curbs after economic growth slowed to the slowest pace in 10 quarters due to Europe's debt crisis that curtailed export demand. The government’s response was a promise to boost credit support for smaller businesses, implementing major government projects and building more affordable housing this year.
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