China Money November 2018

China

China: Credit and money data paints mixed picture in November

December 12, 2018

In November, Chinese banks distributed CNY 1.25 trillion (USD 182 billion) in new yuan loans, well above the CNY 697 billion distributed in October and market expectations of CNY 1.10 trillion. In the 12 months up to November, new yuan loans totaled CNY 15.7 trillion (12 months up to October: CNY 15.5 trillion).

Meanwhile, annual growth in M2—the broadest measure of money supply in China—was stable at October’s 8.0% in November. The reading matched market expectations of a 8.0% increase.

Total social financing (TSF)—a broader measure of credit and liquidity in the economy that includes loans, bonds and other non-traditional instruments—rose from CNY 743 billion in October to CNY 1.52 trillion in November.

Regarding the increase in total financing, analysts at Nomura comment that::

“A rise in bank lending and corporate bond issuance more than offset the continued contraction in shadow banking financing. The rapid rise in bank lending and corporate bond financing suggests Beijing has recognised the strong downward pressure on growth and has become increasingly more serious about stimulating the economy.”

FocusEconomics Consensus Forecast participants expect M2 to expand 8.6% in 2019, which is up 0.1 percentage points from last month’s forecast. In 2020, the panel sees M2 growth of 8.5%.


Author: Ricard Torné, Lead Economist

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China Money November 2018 1

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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