China's banking regulator recently announced that the country's 7.72 trillion yuan (S$1.62 trillion) of new loans in the first half have usually gone to areas backed by the government's macroeconomic policies while lending risks are under control.

Via a statement, the China Banking Regulatory Commission (CBRC) said on its website on Sunday that a fast growth in loans was seen in less wealthy western provinces, agriculture-related industries and for small- and medium-sized enterprises.

CBRC added, "Banks' bad loans ratio stood at 1.8 per cent at the end of June, down 0.64 percentage point from the beginning of the year, and lenders have set aside adequate provisions to cover potential losses."

It should be noted that lot of concerns related a surge in bad lending were raised by China's explosive loan growth under the government's 4 trillion yuan stimulus plan. In the first half, new yuan and foreign currency loans hiked 32.8 per cent from a year earlier to 7.72 trillion yuan. This urged regulators to tighten banks' capital rules to rein in risks.

CBRC said in the statement, "New loans have gone to western provinces such as Chongqing, Sichuan, Guangxi and Inner Mongolia, as well as export-oriented coastal regions worst hit by the financial crisis, including Guangdong, Jiangsu and Zhejiang."