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China: Credit growth improves markedly, while M2 slows in November

December 12, 2014

New yuan loans totaled CNY 853 billion (USD 138 billion) in November, which was well above the CNY 548 billion recorded in the previous month. The print overshot the CNY 650 billion market analysts had expected. In the 12 months up to November, new yuan loans totaled CNY 9.57 trillion (October: CNY 9.34 trillion), which represented the highest since December 2009.

Total social financing—a broader measure of liquidity in the economy that includes loans, bonds and other non-traditional instruments—jumped from CNY 663 billion in October to CNY 1.15 trillion in November, which represented a five-month high. The print overshot the CNY 895 billion that market analysts had expected. The 12-month trailing total social financing, however, dropped to its lowest level since December 2012.

Annual M2 growth, the broadest measure of money supply in China, slowed from October’s 12.6% to 12.3% in November. The result came in under the 12.5% increase the market had expected and represented the lowest reading since March of this year.

According to local media, Chinese authorities have urged commercial banks to accelerate lending in the final months of 2014, in an attempt to shore up growth. The Central Bank would have set a new target for the whole year of CNY 10 trillion in 2014, which is slightly up from the widely-reported goal of CNY 9.5 trillion. Moreover, the recent cut in China’s main policy rates has also played a role in the higher-than-expected credit growth data.

FocusEconomics Consensus Forecast participants expect M2 to expand 12.3% in 2015, which is unchanged over the previous month’s forecast. In 2016, the panel sees M2 growth of 11.7%.


Author: Ricard Torné, Head of Economic Research

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China Money Chart


China Money November 2014

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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