CHINESE bankers are reporting increased lending while fewer firms are taking out loans, an incongruity that helps explain the recent increase in borrowing costs, a private survey showed yesterday.

The number of companies reporting loan applications in the second quarter of this year fell 13 percentage points from the previous period to 38 percent, the survey from New York-based China Beige Book International said. The proportion of banks showing higher lending to businesses rose 10 percentage points to 45 percent, indicating that "credit appears to be concentrated on a few borrowers," according to the report.

The lending disparity is part of a picture of slowing economic expansion across the country, according to the survey, which began last year and is modeled on the US Federal Reserve's Beige Book. The findings add to signs of a cash squeeze in financial markets that pushed interbank borrowing costs to a record high last week.

At the same time, inflation in wages and property is "still notable," which indicates "another quarter of policy restraint and no large amount of new liquidity entering the economy," according to the China Beige Book.

The survey is based on responses from more than 2,000 companies and banks across the country between May 13 and June 3, divided among eight regions.

The latest survey showed fewer retailers reporting revenue growth along with a "sharp" pullback in service industries.