Xinhua reported that lending by Chinese banks may drop to CNY 600 billion in May as the central government winds down its stimulus program and cools the property market to prevent the economy from overheating.

The report said a fall in bank lending in May is expected after the government introduced a raft of measures to curb the skyrocketing property market in April. The measures included a ban on lending for third home purchases and increased scrutiny of developers financing.

Mr Lu Zhengwei an economist at Industrial Bank estimates Chinese banks May lending will be CNY 450 billion to CNY 650 billion compared with CNY 774 billion in April.

He said that "China has asked banks to strictly control lending to industries with overcapacity and to stop lending to new projects not in the CNY 4 trillion stimulus packages. These will be major reasons for a drop off in May lending."

China's banks lent 3.CNY 37 trillion in the first four months of the year, about 45% of the government full year CNY 7.5 trillion lending target.

(Sourced from Xinhua)