China Money July 2019


China: Growth in new yuan loans and total social financing falls below expectations in July

August 12, 2019

In July, Chinese banks distributed CNY 1.06 trillion (USD 151 billion) in new yuan loans, a three-month low. The print was below the prior month’s CNY 1.66 trillion and market expectations of CNY 1.25 trillion; the drop in loans, however, was likely affected by seasonality. In the 12 months up to July, new yuan loans totaled CNY 16.4 trillion (12 months up to June: CNY 16.8 trillion).

Meanwhile, annual growth in M2—the broadest measure of money supply in China—eased to 8.1% in July from 8.5% in June, marking the softest reading since February. The print was short of the 8.4% rise that market analysts had expected.

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 CNY 2.26 trillion in June to CNY 1.01 trillion. Market analysts had expected CNY 1.50 trillion.

FocusEconomics Consensus Forecast participants expect M2 to expand 8.6% in 2019, which is unchanged from last month’s forecast. In 2020, the panel also sees M2 growth of 8.6%.

Author: Ricard Torné, Lead Economist

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China Money Chart

China Money July 2019

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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