China Money April 2017


China: M2 growth falls to nine-month low in April

May 12, 2017

Chinese banks extended CNY 1.10 trillion (USD 159 billion) in new yuan loans in April, slightly above March’s CNY 1.02 trillion. The print comfortably overshot the CNY 714 billion the markets had expected. In the 12 months up to April, new yuan loans totaled CNY 12.8 trillion (March: CNY 12.3 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 March’s CNY 2.12 trillion to CNY 1.39 trillion in April. The print was above market analysts’ expectations of CNY 815 billion.

Meanwhile, annual growth in M2—the broadest measure of money supply in China—declined from 10.6% in March to 10.5% in April. The reading was a nine-month low and fell short of the 10.8% that market analysts had expected.

April’s data signals that the new regulation unveiled in late-March to counter shadow banking activity is starting to bear some fruit.

The government set a M2 growth target of 12.0% for this year. FocusEconomics Consensus Forecast participants expect M2 to expand 10.9% in 2017, which is unchanged 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 Chart

China Money April 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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