By Wang Zhenghua (China Daily)
Updated: 2007-08-10 08:57

The central government's efforts to cool down overheated economic sectors are producing results, according to the latest money supply figures from the central bank's Shanghai headquarters, which were released yesterday.

Renminbi lending at the city's domestic banks slowed again last month, with the value of new loans increasing by just 40 percent of the average monthly increase for the first half of the year, as a result of a string of macro-control measures launched this year.

The figures are widely seen as a reflection of the national trend, as the Beijing-based People's Bank of China is expected to release national figures for July soon.

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While renminbi lending by Shanghai-based Chinese banks in June was up 24.23 billion yuan ($3.2 billion) year on year, in July, loans were down 920 million yuan year on year.

This represents a declining trend, the statement said.

The central bank said the largest year-on-year decline, of 3.87 billion yuan, in lending in July occurred in the real estate sector, followed by the utility maintenance and transportation industries.

Lending for individual consumption continued the growth trend that began in the first half of the year as mortgage lending recorded growth of 5.87 billion yuan in July year on year.

"In July, lending at Shanghai's domestic commercial banks maintained a momentum of decline indicating the influence of multiple macro-control policies launched this year on Chinese commercial banks' use of their funds," the statement said.

Late last month, the central bank raised the amount lenders must hold in reserve by 0.5 percentage points, the sixth hike this year.

After the increase takes effect on Wednesday, the reserve requirement ratio will be 12 percent for big lenders.

It follows the raising of benchmark interest rates by 0.27 percentage points less than three weeks ago and cutting the tax on interest income from 20 percent to 5 percent in a coordinated move to reduce liquidity and stabilize the blistering economy.

Authorities also said yesterday that deposits and lending at the city's foreign financial institutions were picking up.

The outstanding renminbi lending at Shanghai-based foreign banks jumped 76.7 percent last month, year on year, which mainly flowed to the manufacturing, property, wholesale and retail businesses.