CHINESE banks made 852.7 billion yuan (US$138.09 billion) in new loans in November, up 56 percent from the previous month and easily beating market expectations, as the government ramped up efforts to avert a sharper economic slowdown.

    Total social financing (TSF), a broader measure of overall liquidity in the economy, jumped 74 percent from October to 1.15 trillion yuan, the People’s Bank of China said Friday.

    Analysts had expected banks to make 650 billion yuan of loans last month, up from 548.3 billion yuan in October, but sources told Reuters last week that the government had ordered lenders to extend more credit in the final months of 2014 to spur activity.

    “The lending numbers give hope that investment will pick up, now that there are more funds available to pay for capital spending projects,” said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong.

    “The data should be taken positively overall, although it does not outweigh the negative interpretation of earlier industrial output results.”

    Some analysts doubted whether the strong credit growth could be sustained in the coming months as most banks remain reluctant to lend at a time when companies are struggling to pay off debt and bad loans are already sharply rising.

    “The central bank or the government is encouraging banks to support the real economy more, but on the ground there’s still some cautiousness on lending, particularly when the macro economy is not strong and not too many see good projects to lend to,” said Haibin Zhu, chief China economist at JP Morgan in Hong Kong.

    China’s broad M2 money supply rose 12.3 percent in November from a year ago, slightly less than expected.

    Outstanding loans denominated in yuan rose 13.4 percent in November from a year earlier, compared with estimates for a 13 percent increase.

    Bank lending and changes in money supply are crucial parts of China’s monetary policy. The government tells commercial banks how much to lend and when to lend each year.

    The government has launched a crackdown on shadow banking activities to rein in financial risks and curb borrowing costs.

    New bank loans made up for 74 percent of TSF in November, up from 51 percent in January, suggesting banks are shifting some shadow loans back onto their books.

    TSF jumped from October but was still below the monthly average in the first 10 months.

    (SD-Agencies)