China Money


Credit indicators improve markedly in January

Appetite for credit increased in January, as recent data point to a renewed growth momentum. New yuan loans totalled CNY 1.1 trillion (USD 161 billion) in January, more than doubling the CNY 454 billion seen in the previous month. In addition, the reading slightly overshot market expectations that had loans totalling CNY 1.0 trillion and marked, in fact, the strongest figure seen since January 2010. In the twelve months up to January, new yuan loans totalled CNY 8.5 trillion (December: CNY 8.2 trillion).

In addition, total social financing - a broader measure of liquidity in the economy that includes loans, bonds and other non-traditional instruments - jumped from CNY 1.6 trillion in December to CNY 2.5 trillion in January. Meanwhile, the People's Bank of China (PBOC) continued its twice-a-week reverse repurchasing operations in order to inject liquidity into the banking system. Particularly, in the second week of February, the PBOC injected a record CNY 860 billion ahead of the Lunar New Year holiday.

Finally, M2 - the broadest measure of money supply in China - rose 15.9% year-on-year in January (December: +13.8% yoy). The print exceeded market expectations that had M2 expanding 14.0% and represented the highest figure since March 2011.

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China Money Chart

China Money January 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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