China bank lending rose in March: central bank

China’s bank lending rose in March from the previous month, the central bank said Tuesday, though broader credit growth declined as the world’s second-largest economy expands at its slowest pace in nearly a quarter of a century.

Domestic banks extended new loans of 1.18 trillion yuan ($190 billion), the People’s Bank of China (PBoC) said in a statement, up from 1.02 trillion yuan in February.

But total social financing — a broader measure of credit in the economy — totalled 1.18 trillion yuan for March, the central bank said, down from the previous month’s 1.35 trillion yuan.

The median forecast in a survey of economists by Bloomberg News was for a total of 1.5 trillion yuan.

China’s gross domestic product (GDP) expanded 7.4 percent in 2014, the slowest pace in 24 years, and last month the government cut the annual growth target to “approximately seven percent”.

The Chinese government releases GDP figures for January-March on Wednesday. The median forecast in an AFP survey of 15 economists was for the economy to have grown 6.9 percent year-on-year.

The PBoC has been taking steps to boost the economy, cutting deposit and lending rates earlier this year for the second time in three months to facilitate credit expansion and address slowing consumer inflation, as well as enduring producer deflation.

In February it also lowered the reserve requirement ratio — the amount of money banks must put aside as reserves — to encourage lending, for the first time in nearly three years.

The PBoC also said on Tuesday that China’s foreign exchange reserves, the world’s largest, fell to $3.73 trillion at the end of the first quarter, marking the third straight quarterly decline.

The reserves had stood at $3.84 trillion at the end of the fourth quarter.

Mark Williams, chief Asia economist at Capital Economics, said that foreign exchange rate moves were the key factor behind the decline.

“The knee-jerk reaction will be to conclude that the People’s Bank has therefore been selling this much foreign exchange in order to prop up the renminbi,” he wrote in a reaction to the figures, using another name for the yuan currency.

“But by far the biggest impact on the changing value of reserves last quarter came from exchange rate moves.”