Nov. 13 (Bloomberg) -- China Construction Bank Corp., the nation's second largest, will increase its full-year lending target by as much as 50 billion yuan ($7.3 billion) in response to the government's economic stimulus plan.

Construction Bank will focus on railways, roads and airports construction as well as the real estate industry, while cutting loans to industries with excess production capacity or ``high'' energy consumption and pollution, the Beijing-based company said in a statement late yesterday.

China pledged a 4 trillion yuan stimulus plan on Nov. 9 to bolster the fourth-largest economy as the world heads toward a recession. After five years of growth above 10 percent, China's expansion may slow to 7.5 percent or less next year, the weakest in almost two decades, according to UBS AG and Credit Suisse Group AG.

Construction Bank, 10.75 percent owned by Bank of America Corp., increased outstanding loans by 11 percent in the first nine months to 3.5 trillion yuan, slowing from 17 percent expansion in the same period a year earlier, as demand for loans waned in a cooling economy.

China's central bank had earlier capped the amount of new loans Construction Bank was allow to extend this year at last year's level of 350 billion yuan. The ceiling was raised by 5 percent in July.

The stimulus package, equivalent to almost a fifth of China's gross domestic products last year, will go toward low- rent housing, infrastructure in rural areas, as well as roads, railways and airports, by 2010. About 100 billion yuan is earmarked for this quarter.

Loan Quotas Dropped

Bank of China Ltd., the nation's fourth largest by assets, said this week it will drop quotas on corporate lending at all branches and give regional headquarters more authority in approving loans to speed up the process. China Development Bank, a policy lender specialized in public works, plans to increase lending by 40 billion yuan before the end of the year, Chairman Chen Yuan said in a statement.

Agricultural Bank of China, which received a $19 billion capital injection last month, plans to advance at least 100 billion yuan to agricultural-related businesses next year.

The economic slowdown may lead to rising corporate defaults. The non-performing loan ratio of property lending will double to 6 percent by the end of 2010 from the first half this year while 5.7 percent of advances to manufacturers may become delinquent by the same time, HSBC Holdings Plc said in a note on Nov. 11.

Construction Bank fell 0.7 percent as of 9:33 a.m. in Shanghai, extending this year's loss to 56 percent.

To contact the reporter of this story: Luo Jun in Shanghai at jluo6@bloomberg.net

Last Updated: November 12, 2008 20:44 EST