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China: Credit conditions improve markedly on monetary policy easing

July 14, 2015

New yuan loans totaled CNY 1.3 trillion (USD 210 billion) in June, which was well above the CNY 901 billion recorded in the previous month. Furthermore, the print overshot the CNY 1.1 trillion that market analysts had expected. In the 12 months up to June, new yuan loans totaled CNY 10.6 trillion (May: CNY 10.4 trillion).

Total social financing—a broader measure of liquidity in the economy that includes loans, bonds and other non-traditional instruments—rose from CNY 1.2 trillion in May to CNY 1.9 trillion in June, which represented a 5-month high. The print came in above the CNY 1.4 trillion that market analysts had expected.

Annual M2 growth, the broadest measure of money supply in China, rose from May’s 10.8% to 11.8% in June. The result overshot the 11.0% increase the market had expected.

Credit conditions improved in June, mainly due to the People’s Bank of China accommodative monetary policy stance to support growth.

The government targeted M2 growth at 12.0% for this year. FocusEconomics Consensus Forecast participants expect M2 to expand 12.1% in 2015, which is unchanged over the previous month’s forecast. In 2016, the panel sees M2 growth of 11.6%.


Author: Ricard Torné, Lead Economist

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China Money Chart


China Money June 2015

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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