| Bank loans push China output to highest |
SHANGHAI, June 2 -- China's manufacturing activity rose in May to the highest level in more than two years after a surge in bank lending, according to a survey by Hong Kong-based CLSA Asia Pacific Markets.
The Purchasing Managers' Index climbed to 54.1 from 53.3 in April, CLSA said yesterday in a statement. That is the highest since April 2005. A reading above 50 reflects an expansion in manufacturing, Bloomberg News said.
The central government wants to stop the flood of export cash that drove foreign-currency reserves to a record US$1.2 trillion from fueling inflation, asset bubbles and spending on factories that will stand idle in a slowdown. The central bank has raised interest rates twice this year and ordered banks to set aside more money as reserves five times to cool lending and investment.
"Accelerated monetary tightening measures should be expected over the next six months as China fights to regain control of its overheating economy," Jim Walker, CLSA's chief economist, said. "China's commercial banks continue to ignore pleas to restrain lending just as its local governments ignore pleas to restrain spending."
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