China's bank credits fell considerably in April after staying above 1 trillion yuan for three straight months, with yuan-denominated new loans standing at 591.8 billion yuan (US$86.65 billion), the People's Bank of China (PBOC) said on Monday.

It brings outstanding loans in financial institutions up 29.72 percent to 35.55 trillion yuan by the end of April.

The loan increase in April was less drastic than in the first quarter, which was largely in line with market forecasts.

The country has pumped 4.58 trillion yuan of new loans into the economy in the first quarter to stimulate growth.

The figure is already nearing 5 trillion yuan of new loans targeted for the whole year. In March alone, new loans increased by a record 1.89 trillion yuan.

The reminbi deposit increased by 1.03 trillion yuan in April, making the outstanding deposit 53.29 trillion yuan, up 26.21 percent.

In the first-quarter monetary policy report released earlier this month, the central bank said it would continue to instruct financial institutions to extend new loans, despite the earlier surge.

Ding Zhijie, deputy director of the Finance Institute of the University of International Business and Economics, estimated that loan increases would further slow down in the second quarter, but the liquidity would remain abundant.

In the upcoming months, new bank loans should keep growing by 400 to 500 billion yuan per month, estimated Liu Yuhui, an economist with Chinese Academy of Social Sciences (CASS).

The new loans this year would reach about 9 trillion yuan, said Liu.

The broad money supply, M2, gained 25.95 percent to 54.05 trillion yuan at April end from a year earlier, said the bank.

M1, the narrowest measure of money supply that includes cash in circulation plus corporate current deposits, reached 17.82 trillion yuan, up 17.48 percent.

The lasting growth in M1 showed more loans are entering real economy, making the economy more active, experts said.

But the gap between M1 and M2 remained high, suggesting that a considerable amount of savings was still locked up in fixed deposits, instead of flowing into the economy.

(Xinhua News Agency May 12, 2009)