Outstanding loans by financial institutions rose by 13.3 per cent, 1.1 percentage points up from July, to 12.3 trillion yuan (US$1.5 trillion) at the end of August, the central People's Bank of China (PBOC) said in its monthly report.

The growth in the broad measurement of money supply, which covers cash in circulation, all deposits and reserves stock investors place with brokerage firms, grew by 1.1 percentage points from the previous month to 15.5 per cent, the fastest since August 2000.

The PBOC largely attributed the accelerated lending to China's robust economic growth and commercial banks' efforts to improve their support to small and medium-sized enterprises.

"Economic growth momentum has been very strong," said Zhang Xueying, senior analyst with the State Information Centre. "Economic activity is on the rise. We think economic growth may hit 7.9 per cent in the third quarter, and may reach 7.8 per cent for the whole year."

Zhang said a slew of factors, including unexpectedly robust export growth, more prompt use of proceeds from treasury bonds, and steady growth in spending, have boosted economic activity, raising demand for loans.

New loans in August rose by 122.6 billion yuan (US$14.8 billion) from a year earlier, 65 per cent of which came from State-owned commercial banks, the PBOC said.

Outstanding deposits at all financial institutions soared by 17.8 per cent year-on-year to 16.2 trillion yuan (US$1.9 trillion), it said.

Personal savings deposits accelerated further, jumping by 18 per cent from a year earlier to 8.3 trillion yuan (US$1 trillion) at the end of last month. The pace was a hefty 5.7 percentage points faster than the same period last year.

(China Daily September 13, 2002)