China's bank regulator has called on lenders to improve internal risk management following a surge of new loans in the first eight months of this year, a notice on the agency's Website said.

"With bank loans growing rapidly, all kinds of risks are rising in the banking industry," Liu Mingkang, chairman of the China Banking Regulatory Commission, said at a Shanghai conference on Friday, according to the commission's Website.

The central government's 4 trillion yuan (US$586 billion) stimulus plan to protect the economy from the global recession has resulted in heavy spending on public works and helped boost investment in factory equipment and construction.

But it has also brought the risk of asset bubbles and defaults.

Bank lending soared to a record 7.1 trillion yuan (US$1.1 trillion) in the first half of this year. It reached 8.15 trillion yuan by the end of August, the People's Bank of China reported, more than the 4.91 trillion yuan in lending for all of last year.

The Communist Party of China's Central Committee said on Friday at the end of its four-day meeting that the country would continue its proactive fiscal policy and moderately loose monetary policy.

(Shanghai Daily September 21, 2009)