China Money September 2021


China: Credit growth eases further in September

October 13, 2021

In September, Chinese banks distributed CNY 1.7 trillion (roughly USD 260 billion) in new yuan loans, up from August’s 1.2 trillion figure.

Annual growth in M2 money supply edged up from 8.2% in August to 8.3% in September, while annual growth in the stock of total social financing (TSF)—a broader measure of credit and liquidity in the economy that includes loans, bonds and other non-traditional instruments—was down from 10.3% to 10.0%. Softer credit data in September is likely linked to the government’s clampdown on the property sector and the fallout from the Evergrande crisis.

Most of our panelists continue to see the Central Bank’s key policy interest rates remaining unchanged through year-end, though risks are likely skewed towards some additional easing measures in the coming months given the slowing economy.

On the outlook, analysts at Credit Suisse commented:

“We continue to expect a modest loosening of monetary policy for the remainder of the year. We expect TSF growth to tick up going into Q421 but do not see a significant rebound in TSF growth unless there is a notable easing in household mortgage loans. We do not expect any easing to off-balance-sheet credit. In our baseline, we factor in a 70% probability that there will not be a universal RRR cut in the remainder of the year.”

FocusEconomics Consensus Forecast participants expect M2 to expand 9.2% in 2021, which is down 0.1 percentage points from last month’s forecast. In 2022, the panel sees M2 growth of 8.5%, which is also down 0.1 percentage points.

Author:, Economist

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China Money Chart

China Money September 2021

Note: New yuan loans in CNY billion and year-on-year variation of M2.
Source: People’s Bank of China (PBOC) and FocusEconomics calculations.

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