China's new loans drop in February

BEIJING - China's new yuan-denominated lending stood at 620 billion yuan ($99.52 billion) in February, down 90.7 billion yuan year on year, the central bank said Sunday.

New loans in foreign currencies stood at 114.9 billion yuan, up 62.3 billion yuan year on year, the People's Bank of China said in an online statement.

It said the country's social financing, a measure of funds raised by entities in the real economy, amounted to 1.07 trillion yuan in February, up 22.8 billion yuan from the same period last year.

By the end of February, the broad measure of money supply (M2), which covers cash in circulation and all deposits, increased 15.2 percent year on year to 99.86 trillion yuan, the statement said.

The increase was down 0.7 percentage point month on month, but 2.2 percentage points higher year on year.

Meanwhile, the narrow measure of money supply (M1), which covers cash in circulation plus current corporate deposits, jumped 9.5 percent year on year to 29.61 trillion yuan, but the growth rate was 5.8 percentage points lower month on month.

The outstanding amount of cash in circulation (M0) amounted to 6.03 trillion yuan in February, up 17.2 percent from one year earlier.

Last month, the net amount of cash withdrawn from circulation stood at 213.6 billion yuan.

Monetary policies should be appropriately tightened to check inflation, Peter Fung, global chair of KPMG Global China Practice, told Xinhua on Sunday.

"Bank lending should be controlled in growth scale and public market operations should be launched to withdraw currencies in a bid to curb excess fluidity in the market," Fung said.

The country's consumer inflation rebounded to a 10-month high of 3.2 percent in February.

In Tuesday's government report, Premier Wen Jiabao said China aims to hold this year's consumer price growth at around 3.5 percent, lower than the 4-percent target for 2012 but higher than last year's actual inflation rate of 2.6 percent.

The government will lower the M2 growth forecast to about 13 percent in 2013, lower than the 13.8 percent in 2012 and the lowest since 2009, when the government began specifying M2 growth figures in government work reports.