A pedestrian walks past the People’s Bank of China in Beijing. In a bid to stoke activity, the central bank has cut interest rates five times since November, and lowered the amount of cash that the banks must hold as reserves.

Reuters/Beijing

Lending by Chinese banks surged by far more than expected in September, with 1.05tn yuan ($165.47bn) in new yuan loans extended following moves to stop the economy slowing by cutting interest rates and prioritising infrastructure projects.
China’s bailout of its ailing stock markets distorted lending figures in recent months, but a jump of about 30% in new loans in the January-September period from same nine months a year ago showed how the government was trying to steady a slowing economy.
Economists polled by Reuters had forecast new yuan loans would rise to 885.5bn yuan in September from 809.6bn yuan in August.
In a bid to stoke activity, the central bank has cut interest rates five times since November, and lowered the amount of cash that the banks must hold as reserves. The latest cut in interest rates and banks’ reserve requirements came on August 25.
Other policy measures have included fast-tracking infrastructure investment to cutting down payments for some first-time home buyers and pushing ahead with financial reforms.
“While this points to better financing conditions in the economy, it must be remembered that monetary statistics have always came out with encouraging numbers after an easing move but remain dispirited thereafter - which is a clear indication that there are ongoing problems on the demand side, rather than the supply side,” said Chester Liaw, an economist at Forecast Pte Ltd in Singapore.
New loans totalled 9.9tn yuan in the first nine months, including 1.48tn yuan in July – the highest monthly reading since 2009 as the government pumped billions into equity markets to avert a full-blown crash.
New loans were 9.78tn yuan in the whole of 2014.
“This shows that monetary policy is already loose and room for further easing is limited,” said Lin Hu, an economist at Guosen Securities in Beijing.
“Fiscal policy may play a more active role,” he said.
A summer stock market crash and a surprise devaluation of the yuan in August sent tremors through global markets, raising concerns both inside and outside of China about Beijing’s ability to manage its economy.
Data on October 19 is expected to show China’s economic growth slowed to 6.8% in the third-quarter, the weakest since the global financial crisis, putting pressure on policymakers to roll out more support measures as fears of a dramatic slowdown spook investors.
Weighed down by a cooling property market, widespread factory overcapacity and high local debt levels, China is expected to report its slowest economic growth in a quarter of a century this year.
China’s economic planner said it approved 218 fixed-asset projects worth 1.81tn yuan ($285.3bn) in the first nine months of the year, as Beijing looks to drive infrastructure investment to support slowing economic growth.
The authorities are expected to loosen monetary policy further in coming months, but questions surround its effectiveness, partly because it has encouraged investors to move more money out of China.
The latest Reuters poll showed that the central bank may cut interest rates by another 25 basis points and lower reserve requirements by 50 basis points by the year-end.  The central bank said broad M2 money supply grew 13.1% from a year earlier, the People’s Bank of China said in a statement on its website.
China’s total social financing (TSF), a broad measure of overall liquidity in the economy, rose to 1.30tn yuan in September from 1.08tn yuan in August, the central bank said.
Weighed down by a cooling property market, widespread factory overcapacity and high local debt levels, China is expected to report its slowest economic growth in a quarter of a century this year.