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China Money March 2020

China: M2 growth jumps to three-year high in March due to monetary stimulus

Annual growth in M2—the broadest measure of money supply in China—jumped from February’s 8.8% to a three-year high of 10.1% in March. The print overshot the 8.8% increase that market analysts had expected.

In March, Chinese banks distributed CNY 2.85 trillion (USD 405 billion) in new yuan loans. The reading came in well above the CNY 906 billion recorded in February and overshot the CNY 1.80 trillion that market analysts had expected. In the 12 months up to March, new yuan loans totaled CNY 18.1 trillion (12 months to February: CNY 16.9 trillion).

Total social financing (TSF)—a broader measure of credit and liquidity in the economy that includes loans, bonds and other non-traditional instruments—jumped from CNY 855 billion in February to CNY 5.15 trillion in March. Market analysts had expected a softer increase in TSF to CNY 2.8 trillion.

A raft of measures unveiled by the Central Bank since the outbreak of the crisis, including a reduction in key interest rates and reserve requirement ratios, are supporting credit conditions in China.

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