China Monetary Policy


Credit conditions deteriorate in October

New yuan loans totalled CNY 505 billion (USD 81 billion) in October, down from the CNY 623 billion recorded in September. In addition, the reading undershot the CNY 590 billion expected by the market and recorded, in fact, the smaller increase since September 2011. In addition, total social financing - a broader measure of liquidity in the economy, which includes loans, bonds and other non-traditional instruments - declined from CNY 1.65 trillion in September to CNY 1.23 trillion in October. Meanwhile, the People's Bank of China continued its twice-a-week reverse repurchasing operations in order to inject liquidity into the banking system. Finally, M2 - the broadest measure of money supply in China - rose 14.1% year-on-year in October. The print was below the 14.8% rise observed in September and undershot the 14.5% increase expected by the market.

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China Monetary Policy Chart

China Money October 2012

Note: 1-year lending rate, 1-year deposit rate and reserve requirement ratio (RRR) for large banks in %.
Source: People

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