(Yicai) April 15 -- China’s credit disbursement has returned to a moderate level in the first quarter of the year, positively contributing to the country’s economic recovery.

The loan disbursement progress returned to close to 40 percent of the figure in the past five years, as the phenomenon of excessive pursuit of credit expansion significantly alleviated, said Lin Yingqi, analyst at China International Capital Corporation.

China’s outstanding social financing rose 8.7 percent to CNY390.32 trillion (USD53.9 trillion) as of the end of last month from a year earlier, compared with 10 percent in March last year, according to data released by the People’s Bank of China on April 12. M2, a broad measure of money supply that covers cash in circulation and all deposits, jumped 8.3 percent to CNY304.8 trillion in the period, versus 12.7 percent a year earlier, PBOC data also showed.

The slowdown in the growth of outstanding social financing and M2 reflects the improved quality and effectiveness of credit support for the development of the economy, industry insiders said. The cost of social financing has remained stable, with a slight decline, leading to a reduction in corporate debt burden, which is further contributing to the stabilization and recovery of the economy, they added.

The acceleration of the structural economic transformation and the decrease in credit reliance may lead to slower credit and social financing growth, said Wang Jian from the Guosen Securities Economic Research Institute. However, this does not necessarily imply a slowdown in economic growth, as emerging industries will likely contribute to a higher gross domestic product to credit ratio, Wang added.

There is a close relation between the degree of financial looseness and the quality of economic growth, said Lian Ping, chairman of the China Chief Economist Forum. Continuous rapid growth in monetary credit can have significant side effects and be detrimental to economic transformation and upgrading, Lian noted.

The effective financing needs of the real economy have been met, and the efficiency of capital utilization has significantly improved, said Wang Ani, chief financial officer of Xianyang Caihong Optoelectronics Technology, a Chinese designer and maker of thin-film-transistor liquid-crystal displays.

The largest project in Shaanxi province in which Xianyang Caihong Optoelectronics invested received strong support from financial institutions, effectively addressing the funding gap of the project, Wang Ani noted, adding that the project is progressing smoothly.

Yulin Mingjie Agricultural Investment Potato Industry recently introduced world-class technology and equipment for technical upgrades and equipment renovation, the company’s legal representative Luo Xiaohu said. The funding gap was CNY300 million (USD41.4 million), and the loans obtained from the bank effectively met the figure, Luo added.

Various parties are intensifying efforts to prevent idle funds, said Ming Ming, chief economist at Citic Securities. As companies regulate the use of funds, the growth rate of the total financing may slow down, he added. However, the efficiency of credit funds utilization is continuously improving, which provides greater support for high-quality economic development, he explained.

Editor: Futura Costaglione