China's outstanding bank loans surged to 209.4 billion yuan (US$26 billion; euro20 billion) in May, nearly double that from a year ago, the central bank said, fanning worries that efforts to curb soaring investment might not be working.

May 2005 loan figures were 108.5 billion yuan (US$13.6 billion; euro10.8 billion).
 
A State Council meeting on Wednesday drew calls for tighter controls on investments and land use.

China should not just pursue fast economic growth and blind expansion in investment, state-run China Central TV reported.

The People's Bank of China, or central bank, echoed the concern.

"Each bank needs to pay close attention to the risks that overly rapid lending can bring and reasonably control their lending," the central bank said in a statement following a meeting with major banks on Wednesday.

Figures released by the central bank on the same day showed that China's broadest measure of money supply, M2, jumped 19.1 percent by the end of May from a year earlier, exceeding economists' forecasts and raising expectations that the government might take further measures to tighten credit.

The data confirmed earlier state media reports that suggested a recent interest rate hike and other measures aimed at discouraging real estate speculation and other risky investments have not had much impact.

The central bank's report did not include total lending for the period January-May. Reports last week put new bank loans for the first five months at 2.12 trillion yuan (US$264 billion; euro207 billion).

The reports forecast that lending could exceed 3 trillion yuan (US$374 billion; euro245 billion) this year, way above the central bank's annual target of 2.5 trillion yuan (US$312 billion; euro245 billion).

China's economy grew 10.3 percent in the first three months of the year, boosted by strong growth in bank lending and surging exports.

Also on Wednesday, the National Bureau of Statistics reported that the country's main benchmark of industrial output rose 17.9 percent in May from a year earlier to 706 billion yuan (US$88.2 billion; euro70 billion). Industrial output rose 17 percent year-on-year in the January-May period.

Forecasts for May had put growth in industrial output at below 17 percent.

Auto production rose 28.4 percent in May from a year earlier to 620,000 units, up 21 percent from April. Pig iron output rose 23 percent, crude steel 19.6 percent and steel products 27 percent.

Manufacturing remains "very, very robust," Tan Hui, an economist with Standard Chartered Bank said, noting worries over excess production in some industries, such as auto and steel.

(China Daily June 15, 2006)