Investors may be worried that recently announced Chinese lending restrictions will put a damper on global growth, but there is actually little chance of that happening as the country's banks likely need to accelerate their loans to meet even reduced 2010 targets, a new note says.
Stéfane Marion, analyst with National Bank Financial Group, said in a note to clients that while the Chinese government has told its banks to keep 2010 loans to less than 7.5 trillion Yuan (about US$1.1-trillion) in 2010, down from 9.5 trillion Yuan in 2009, it is still more than double the lending levels in 2008.
"The other thing to keep in mind is that in order to achieve the 2010 loan target, the six-month cumulative sum of new loans must actually accelerate significantly from its December 2009 level of 2.2 trillion Yuan," the note said. The 2009 levels ended up so high because most of the loans came in the first half of the year. "As such, we do not view China's 2010 loan target as being a significant drag."
National Bank also agrees with the newest IMF projection of 4% global GDP growth in 2010, up from 3.1%.