Beijing: Lending by Chinese banks increased sharply in October, with disbursement of USD 92.7 billion in easy loans to thousands of sick SMEs that have gone bankrupt due to a credit squeeze and vanishing export markets.
China's new yuan-denominated lending touched 586.8 billion yuan (USD 92.7 billion) in October, up 17.5 billion yuan year-on-year, the People's Bank of China (PBOC) announced on Friday.
The new loans made last month also represented a sharp increase from 470 billion yuan in September.
By the end of October, outstanding broad money supply (M2), which covers cash in circulation and all deposits, rose 12.9 percent year-on-year to 81.68 trillion yuan, the PBOC said in a statement.
The narrow measure of money supply (M1), which covers cash in circulation, plus demand deposits, increased 8.4 percent year-on-year to 27.66 trillion yuan at the end of October.
The sharp increase in lending was attributed to a spate of SME closures due to a credit squeeze caused by China's move to cut money supply to contain inflation, as well as shrinking export markets due to the EU debt crisis and slow recovery of the US economy.
Lending to SMEs was increased by the banks after Chinese Premier Wen Jiabao rushed to Zhejiang province, where owners of hundreds of SMEs closed their units, leaving thousands of migrant workers without pay and jobs.