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China banking regulator urges enhanced management

(Xinhua)
Updated: 2009-07-19 21:15

BEIJING: China's banking regulator urged banks to strengthen risk control and optimize credit structure to prevent possible financial risks amid a surge of bank loans.

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Rapid expansion of bank loans in the first half year boosted the country's economic growth, but it also increased the possibilities of financial risks, Liu Mingkang, chairman of the China Banking Regulatory Commission, said in a speech posted on the regulator's web site on Sunday.

He said Chinese banks had seen imprudent and extensive lending, and should be cautious about possible risks including inadequate capital for investment projects, financing risks, concentration of loans, and risks on property market led by rapid loan growth.

Government data showed bank lending hit a record 7.37 trillion yuan ($1.08 trillion) in the first half, as the government looked to a moderately easy monetary policy to support economic recovery. The figure far exceeded the full-year target of 5 trillion yuan.

The Chinese economy expanded 7.9 percent in the second quarter, buoyed by the government's massive stimulus packages. The first half year recorded a growth of 7.1 percent year on year.

Liu said China's economy was back on the track for recovery as a result of a pro-active fiscal policy and moderately easy monetary policy, but the foundation for recovery was not yet solid and there are still many uncertainties.

He was speaking at a conference held in Beijing on July 17.