China Money


Credit indicators improve markedly in March

Credit conditions improved sharply in March, as authorities seek to support economic growth while trying to maintain inflationary pressures under control. New yuan loans totalled CNY 1.1 trillion (USD 171 billion) in March, nearly doubling the CNY 620 billion seen in the previous month. Moreover, the reading overshot market expectations that had loans totalling CNY 900 billion. In the 12 months up to March, new yuan loans totalled CNY 8.5 trillion (February: CNY 8.4 trillion).

In addition, total social financing - a broader measure of liquidity in the economy that includes loans, bonds and other non-traditional instruments - soared from CNY 1.1 trillion in February to CNY 2.5 trillion in March. Simultaneously, in order to drain liquidity from the money market, the People's Bank of China (PBOC) continued to conduct its twice-a-week reverse repurchasing operations.

Meanwhile, M2 - the broadest measure of money supply in China - rose 15.7% year-on-year in March (February: +15.2% yoy), exceeding market expectations that had M2 expanding only 14.6%.

The government targets an M2 growth of 13% for this year. FocusEconomics Consensus Forecast participants expect M2 will expand 13.4% in 2013, which is down 0.4 percentage points over the previous month's forecast. In 2014, the panel sees M2 growth at 13.1%.

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China Money Chart

China Money March 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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