China is unlikely to further lower its reserve requirement ratio for banks anytime soon as credit growth has returned back to a relatively normal level in the first quarter, said Lu Zhengwei, chief economist of Industrial Bank Ltd.
Actual expansion in money supply and aggregate financing is likely to hit between 12 and 14 percent this year, the Hong Kong Economic Journal quoted Lu as saying.
The country’s policy-makers may have shifted their policy stance from slightly loosened to prudent, he said.
However, given China’s efforts to remove excess supply, Lu believes the level of non-performing loans in Chinese banks will probably rise this year.
Meanwhile, the property market is overheating again in first-tier cities while second-tier and third-tier cities continue to face oversupply, he said.
Lu also said statistical defects have underestimated the supply of residential properties in Shanghai.
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