China Money


Credit indicators continue to improve in August

New yuan loans totalled CNY 711 billion (USD 116 billion) in August, which was above the CNY 700 billion recorded in the previous month. The print, however, came in below market expectations of loans totalling CNY 730 billion. In the 12 months up to August, new yuan loans totalled CNY 8.6 trillion (July: CNY 8.6 trillion).

Total social financing - a broader measure of liquidity in the economy that includes loans, bonds and other non-traditional instruments - soared to the highest level in four months, jumping from 809 billion in July to CNY 1.6 trillion in August. Meanwhile, in order to manage liquidity from the money market, the People's Bank of China (PBOC) continued to conduct its twice-a-week reverse repurchasing operations.

M2, the broadest measure of money supply in China, rose 14.7% year-on-year in August (July: +14.5% yoy). The figure slightly overshot market expectations which saw M2 growth inching up to 14.6%.

The government's M2 growth target for this year is 13.0%. FocusEconomics Consensus Forecast participants expect M2 to expand 13.8% in 2013, which is unchanged over the previous month's forecast. In 2014, the panel sees M2 growth at 13.0%.

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China Money Chart

China Money August 2013

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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