China Monetary Policy


New yuan loans and M2 reflect looser monetary policy

Credit conditions have improved significantly in May after the People's Bank of China (PBOC) cut the reserve requirement ratio (RRR) by 50 basis points on 12 May. Against this backdrop, new yuan loans totalled CNY 793 billion (USD 125 billion) in May, up from the CNY 682 billion recorded in April. In addition, the May print overshot the CNY 700 billion expected by the market. Meanwhile, M2 the broadest measure of money supply in China expanded 13.2% year-on-year in May, which was above both the 12.8% rise observed in April and the 12.9% increase expected by the market.

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