China Money

China

China: Credit conditions improve in May

June 12, 2014

New yuan loans totalled CNY 871 billion (USD 140 billion) in May, which was above the CNY 775 billion recorded in the previous month. The print was virtually in line with market expectations of loans totalling CNY 870 billion. In the 12 months up to May, new yuan loans totalled CNY 9.3 trillion (April: CNY 9.1 trillion), which represented the highest level since January 2010.

Total social financing—a broader measure of liquidity in the economy that includes loans, bonds and other non-traditional instruments—moderated slightly from the CNY 1.6 trillion recorded in April to CNY 1.4 trillion in May. The reading matched market expectations. Meanwhile, in order to manage liquidity in the money market, the People’s Bank of China (PBOC) continued to conduct its twice-a-week reverse repurchasing operations.

Annual M2 growth, the broadest measure of money supply in China, accelerated from 13.2% in April to 13.4% in May, which represented the fastest expansion in five months. The print was in line with market expectations.

The improvement in credit conditions in May partially reflected the economic measures adopted by Chinese authorities to prop up growth. That said, analysts warn that the Central Bank should adopt a more accommodative monetary policy stance in order to achieve the 7.5% growth target set for this year. As Liu Li-Gang, Chief Economist for Greater China at ANZ, points out:

“China’s new credit extension came in higher than expected, possibly because the policy banks accelerated the loan extension to the shanty town renovation projects. […]. In addition, the targeted RRR cut may increase bank lending somewhat, although the contribution should be insignificant given the affected banks are small in terms of asset size. […] It is worth noting that the monetary policy cannot be used as a structural policy to address the structural issues facing China’s economy. There appears to be an inconsistency between the macroeconomic objective of maintaining 7.5% growth and China’s monetary policy, and the PBoC’s policy inaction will likely constrain the government’s ability to achieve its growth target this year.”

FocusEconomics Consensus Forecast participants expect M2 to expand 12.9% in 2014, which is unchanged over the previous month’s forecast. In 2015, the panel sees M2 growth of 12.4%.


Author: Ricard Torné, Lead Economist

Sample Report

Looking for forecasts related to Money in China? Download a sample report now.

Download

China Money Chart


China Money May 2014 0

Note: New yuan loans in CNY billion and year-on-year variation of M2.
Source: People’s Bank of China (PBOC) and FocusEconomics calculations.


China Economic News

  • China: Inflation slows in November

    December 10, 2018

    Consumer prices fell 0.3% from the previous month in November, contrasting October’s 0.2% increase and marking the lowest print in eight months.

    Read more

  • China: Manufacturing sector slows to a standstill in November, PMI inches down to over two-year low

    November 30, 2018

    The manufacturing purchasing managers’ index (PMI) published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP) edged down to an over two-year low of 50.0% in November from 50.2% in October, undershooting market expectations of a stable 50.2% reading.

    Read more

  • China: Growth in house prices inches up in October

    November 15, 2018

    House prices in 70 large- and medium-sized cities rose 1.0% in October in month-on-month terms according to a weighted average index calculated by Thomson Reuters from data issued by the National Bureau of Statistics (NBS).

    Read more

  • China: Industrial production growth inches up in October

    November 14, 2018

    Industrial production expanded 5.9% year-on-year in October, up from a 5.8% rise in September and overshooting market expectations of 5.8%. October’s print mainly reflected faster growth in the mining and manufacturing sectors, while the dynamics in the production and distribution of electricity, heating power, gas and water softened compared to September. On a month-on-month basis, industrial production increased 0.48% in seasonally-adjusted terms in October, unchanged from September’s expansion.

    Read more

  • China: Investment growth accelerates to four-month high in October

    November 14, 2018

    Urban fixed asset investment expanded 5.7% annually in the first 10 months of the year, up from the 5.4% increase in the first 9 months of the year.

    Read more

More news

Search form