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China Money February 2022

China: Credit growth disappoints in February

In February, Chinese banks distributed CNY 1.2 trillion (roughly USD 190 billion) in new yuan loans, down from January’s 4.0 trillion figure, which was boosted by the usual front-loading of loans at the start of the year. Annual growth in M2 money supply fell from 9.8% in January to 9.2% in February, while annual growth in the stock of 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 10.5% to 10.2%. The figures undershot market expectations.

The slowdown in credit growth in February came despite a series of easing measures by the PBOC in recent months. As such, the February reading raises the prospect of more easing in the near term, particularly given the uncertain external backdrop and that the country is in the midst of a surge in Covid-19 cases which is buffeting demand.

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