China: Credit conditions deteriorate in July
In July, Chinese banks distributed CNY 993 billion (USD 143 billion) in new yuan loans. The reading came in below both the CNY 1.81 trillion recorded in June and the CNY 1.20 trillion that market analysts had expected. In the 12 months up to July, new yuan loans totaled CNY 19.2 trillion (12 months to June: CNY 19.1 trillion).
Total social financing (TSF)—a broader measure of credit and liquidity in the economy that includes loans, bonds and other non-traditional instruments—fell from CNY 3.43 trillion in June to CNY 1.69 trillion in July. Market analysts had expected a decrease in TSF to CNY 1.85 trillion.
Annual growth in M2—the broadest measure of money supply in China—decreased from June’s 11.1% to 10.7% in July. The result was below the 11.2% increase that market analysts had expected.
The slowdown in M2 growth reflected more targeted monetary policy in order to avoid stock market bubbles.