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China to give banks more cash to lend to farmers, small business

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China's central bank will increase its relending quota by 50 billion yuan ($8.1 billion) this year, stepping up efforts to give targeted support to parts of the economy it sees as lagging.

The People's Bank of China (PBOC) lends funds to banks at low rates that they must lend on to customers that meet certain criteria. The fresh quotas will be directed towards agriculture and lending to small businesses, the central bank said.

Of the total, 20 billion yuan will go towards agriculture and the balance to small business, it said in a statement on its website.

The move comes a day after the central bank said it would make targeted adjustments and make monetary conditions "not too tight or too loose," as it seeks to keep economic growth from flagging too much.

China is likely to report next week that economic growth last year was the slowest in 24 years, and analysts predict a further loss of momentum in 2015 even if the government rolls out more stimulus.

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Banks issued far less credit in December than expected despite a surprise rate cut by the central bank.

The relending program is a way for the central bank to push credit into areas that banks are often reluctant to supply credit to.

Growth likely slowed to 7.2 percent in the fourth quarter, putting the economy on track to undershoot the official 7.5 percent target for the full year 2014, a Reuters poll showed.

Some economists predict a further slowing to around 7 percent or less this year.