China Money


Credit indicators moderate in May

New yuan loans totalled CNY 667 billion (USD 109 billion) in May, which was below both the CNY 793 billion seen in the previous month and market expectations that had loans totalling CNY 815 billion. In the 12 months up to May, new yuan loans totalled CNY 8.5 trillion (April: CNY 8.6 trillion).

In addition, total social financing - a broader measure of liquidity in the economy that includes loans, bonds and other non-traditional instruments - moderated further from CNY 1.8 trillion in April to CNY 1.2 trillion in May. Moreover, the print undershot market expectations that had the aggregate financing ranging between CNY 1.5 trillion and CNY 1.8 trillion. Simultaneously, 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.

Meanwhile, M2 - the broadest measure of money supply in China - rose 15.8% year-on-year in May (April: +16.1% yoy), missing market expectations that had M2 growth slowing moderately to 15.9%.

The government targets an M2 growth of 13.0% for this year. FocusEconomics Consensus Forecast participants expect M2 will expand 13.7% in 2013, which is up 0.3 percentage points 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 May 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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