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China: Credit indicators reflect distortions related to Chinese New Year holiday

March 10, 2014

New yuan loans totalled CNY 645 billion (USD 105 billion) in February, which was less than half the CNY 1.32 trillion recorded in the previous month. The print undershot market expectations of loans totalling CNY 730 billion. In the 12 months up to February, new yuan loans totalled CNY 9.2 trillion (January: CNY 9.1 trillion), which marked the highest print since January 2010. Total social financing-a broader measure of liquidity in the economy that includes loans, bonds and other non-traditional instruments-fell sharply from January's record high of CNY 2.6 trillion to CNY 939 billion in February, which represented the lowest reading since October 2013. Meanwhile, in order to manage liquidity from the money market, the People's Bank of China (PBOC) continued to conduct its twice-a-week reverse repurchasing operations. According to analysts, the extremely volatile credit data observed in January and February mainly reflected seasonal factors related to the Chinese New Year holiday. M2, the broadest measure of money supply in China, rose 13.3% over the same month last year in February (January: +13.2% year-on-year). The increase slightly overshot the 13.2% rise that market analysts had expected. 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 at 12.6%.


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China Money February 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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