China Monetary Policy


New yuan loans increase while M2 moderates in August

Credit conditions showed mixed signals in August, with new yuan loans improving markedly and M2 moderating after reaching a one-year high in July. New yuan loans totalled CNY 704 billion (USD 111 billion) in August, well above the CNY 540 billion recorded in July. In addition, the August print overshot the CNY 600 billion expected by the market. The figure represented, in fact, the largest August reading on record, likely reflecting government efforts to spur lending in order to finance investment projects. Meanwhile, M2 - the broadest measure of money supply in China - rose 13.5% year-on-year in August, which was below both the 13.9% rise observed in July and the 14.0% increase expected by the market. The People's Bank of China targets an M2 growth of 14% for this year.

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