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China: Credit indicators provide mixed signals in November

December 11, 2012

New yuan loans totalled CNY 523 billion (USD 84 billion) in November, up from the CNY 505 billion recorded in October. However, the reading came in below the CNY 550 billion expected by the market. In the eleven months up to November, new yuan loans totalled CNY 7.7 trillion, which implies that total lending is on track to meet the estimated government target of around CNY 8.5 trillion for 2012.

In addition, total social financing - a broader measure of liquidity in the economy, which includes loans, bonds and other non-traditional instruments - declined from CNY 1.30 trillion in October to CNY 1.14 trillion in November. Meanwhile, the People's Bank of China continued its twice-a-week reverse repurchasing operations in order to inject liquidity into the banking system.

Finally, M2 - the broadest measure of money supply in China - rose 13.9% year-on-year in November. The print undershot market expectations that had M2 expanding at the previous month's 14.1%.

The People's Bank of China targets an M2 growth of 14% in 2012.


Author: Ricard Torné, Head of Economic Research

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China Money November 2012

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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