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Bank lending in China hit a fresh record after a much stronger-than-expected surge in credit in November, even as authorities step up efforts to reduce risks in the financial system from a rapid build-up in debt.
Analysts polled by Reuters had predicted new yuan loans would rise to 800 billion yuan, from October's 663.2 billion yuan.
The November figure was well above the highest forecast in the poll.
"New loans exceeded expectations due to strong corporate financing demand, with medium- and long-term corporate and household loans expanding sharply," Zheng Lianghai, an analyst at Caitong Fund Management said.
Analysts also attributed the jump in new loans to an ongoing regulatory crackdown on off-balance sheet lending, which is forcing banks to issue more formal loans, and to a recent rout in China's bond markets which has made it tougher for companies to raise money by issuing bonds.
The November credit splurge brought China's total new lending so far this year to 12.94 trillion yuan, more than Italy's GDP and exceeding 2016's record 12.65 trillion yuan with one month left to go.
China is in the second year of a campaign to contain and reduce systemic threats to its financial system, with the central bank keeping liquidity tight as it seeks to flush out speculative financing and force growth-obsessed local governments to keep their debt levels under control.
Still, the world's second-largest economy remains heavily reliant on credit, and analysts agree more painful structural reforms are needed on top of current efforts to force banks and companies to cut debt levels.
Regulators unveiled sweeping new rules last month for the asset management industry to discourage riskier practices. They also started targeting micro loans in a bid to curb short-term household debt, which is low but rising rapidly.
Household loans, mostly mortgages, rose to 620.5 billion yuan in November from 450.1 billion yuan in October, according to Reuters calculations based on the central bank's data.
Corporate loans rose to 522.6 billion yuan in November from 214.2 billion yuan a month earlier.
Broad M2 money supply (M2) in November grew 9.1 percent from a year earlier, beating forecasts for an expansion of 8.9 percent and picking up from 8.8 percent in October, which was the slowest pace since records began in 1996.
China's central bank has said a slowdown in M2 growth could be a "new normal" due to official deleveraging efforts in the financial system and has urged markets not to read to much into the cooler growth.
Authorities are walking a fine line, however, as they try to curb risks without pushing borrowing costs too high, which could slow economic growth and roil financial markets.
The government's push to reduce risks has triggered several sell-offs in bonds already this year, with the most recent jitters spilling over into the stock market.
A central bank adviser said in November that he expected the government's financial clampdown to be less forceful next year.
CREDIT GROWTH SLOWING?
Outstanding yuan loans at the end of November grew 13.3 percent from a year earlier, faster than an expected 13 percent rise.
However, despite another record year for bank lending, some analysts said the pace of broad credit expansion has been slowing due to the government's "de-risking" drive.
"The upshot is that tighter monetary conditions have driven a persistent decline in credit growth in recent quarters, with this slowdown accelerating last month," said Julian Evans-Pritchard, China economist at Capital Economics.
"We think the drag on economic activity from this slowdown in credit creation will eventually trigger a renewed round of monetary easing."
If the tightening campaign is sustained and financing costs continue to slowly rise, analysts polled by Reuters believe China's growth will cool to around 6.6 percent this quarter and 6.4 percent in 2018, from a forecast-beating 6.9 percent in the first nine months of the year.
China's total social financing (TSF), a broad measure of credit and liquidity in the economy, rose to 1.6 trillion yuan ($241.82 billion) last month from 1.04 trillion yuan in October.
That can provide hints of activity in China's vast and unregulated shadow banking sector, which authorities have also been targeting in their campaign to reduce systemic risks.
Combined trust loans, entrusted loans and undiscounted bankers' acceptances, which are common forms of shadow banking finance, rose to 173 billion yuan in November from 107 billion yuan in October, according to Reuters calculations.