China Money July 2017

China

China: M2 growth falls to new low in July

August 15, 2017

Chinese banks extended CNY 826 billion (USD 124 billion) in new yuan loans in July, below June’s CNY 1.54 trillion. The print overshot the CNY 800 billion the markets had expected but represented an eight-month low. In the 12 months up to July, new yuan loans totaled CNY 13.5 trillion (June: CNY 13.1 trillion).

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 June’s CNY 1.78 trillion to CNY 1.22 trillion in July.

Meanwhile, annual growth in M2—the broadest measure of money supply in China—declined from 9.4% in June to 9.2% in July. The reading fell short of the 9.5% that market analysts had expected and represented the lowest rate since the current series began in 1996 in May.

The government set an M2 growth target of 12.0% for this year. FocusEconomics Consensus Forecast participants expect M2 to expand 10.8% in 2017, which is down 0.1 percentage points from the previous month’s forecast. In 2018, the panel sees M2 growth of 10.4%.


Author: Ricard Torné, Lead Economist

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China Money July 2017

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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