China Money February 2016


China: Credit and money indicators retreat in February following January's surge

March 11, 2016

New yuan loans totaled CNY 727 billion (USD 112 billion) in February, which came in well below the CNY 2.5 trillion registered in the previous month. January’s reading had benefited from a seasonal spike ahead of the Lunar New Year holidays in early February and that banks usually front-load their lending quota at the beginning of the year to protect their market share. February’s print undershot the CNY 1.2 trillion the markets had expected. In the 12 months up to February, new yuan loans totaled CNY 12.5 trillion (January: CNY 12.8 trillion).

Total social financing—a broader measure of liquidity in the economy that includes loans, bonds and other non-traditional instruments—fell from CNY 3.4 trillion in January to CNY 780 billion in February.

Meanwhile, annual growth in M2—the broadest measure of money supply in China—ticked down from 14.0% in January to 13.3% in February, missing market expectations of 13.7%.

FocusEconomics Consensus Forecast participants expect M2 to expand 12.1% in 2016, which is unchanged over the previous month’s forecast. In 2017, the panel sees M2 growth of 11.3%.

Author: Ricard Torné, Lead Economist

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China Money Chart

China Money February 2016 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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