Backed up by China's doubled lending in May, Chinese bank stocks jumped on Friday with China Construction Bank up by 5.7 percent.

Industrial output growth accelerated to 8.9 percent and retail sales rose 15.2 percent in the world's 3rd largest economy. The figures are better than what most economists anticipated as government stimulus spending revived the country's economy.

In China, new loans soared to 664.5 billion yuan, from 318.5 billion yuan in the previous year. Top lender ICBC was up 2.9 percent at HK$5.25, while China Construction Bank (CCB) had advanced 4 percent to HK$5.68. Both stocks gained on back of large trading volumes.

But China's recovery by record lending is alarming as it may result in inflating asset bubbles and adding to banks' bad loans. Ma Jun, chief China economist with Deutsche Bank AG in Hong Kong said, "These stronger numbers will support investor expectations for a V-shaped economic recovery." Jun further added, "The pace of bank lending is dangerous and the risks include inflation, bad loans and economic volatility."

According to the central bank, M 2(the broadest measure of money supply), rose 25.7 percent in May from a year earlier.

On speculation of economy's recovery China's five-year interest-rate swaps rose today to the highest in eight months. The car industry also gained from government efforts to stimulate growth, as tax cuts and subsidies for buyers broaden China's lead over the U. S. as the world's biggest auto market this year.

In spite of signs of economy's recovery, Wang Qing, an economist with Morgan Stanley in Hong Kong thinks that, though fresh economic data depicts a recovering Chinese economy, yet the external environment is weak.