China Money


Credit indicators moderate in December

New yuan loans totalled CNY 454 billion (USD 73 billion) in December, down from the CNY 523 billion recorded in November. Moreover, the print came in below the CNY 550 billion expected by the market and marked, in fact, the lowest reading seen in three years. In the full year 2012, new yuan loans totalled CNY 8.2 trillion, which is well above the CNY 7.5 trillion tallied in 2011 but below the government's target of around CNY 8.5 trillion.

However, total social financing - a broader measure of liquidity in the economy, which includes loans, bonds and other non-traditional instruments - soared from CNY 1.14 trillion in November to CNY 1.63 trillion in December. In 2012, total social financing climbed to CNY 15.8 trillion (2011: CNY 12.8 trillion), highlighting the increasingly important role of non-traditional lending. Meanwhile, the People's Bank of China continued its twice-a-week reverse repurchasing operations in order to inject liquidity into the banking system.

Finally, M2 - the broadest measure of money supply in China - rose 13.8% year-on-year in December. The print undershot both the 13.9% rise seen in November and market expectations of a 14.0% increase.

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China Money Chart

China Money December 2012

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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