China: Money and credit data paint a mixed picture in August
In August, Chinese banks distributed CNY 1.28 trillion (USD 190 billion) in new yuan loans, down from the CNY 1.45 trillion distributed in July but above market expectations of CNY 1.04 trillion. In the 12 months up to August, new yuan loans totaled CNY 15.4 trillion (12 months up to July: CNY 15.2 trillion).
Meanwhile, annual growth in M2—the broadest measure of money supply in China—fell to 8.2% in August from July’s 8.5%. The reading undershot market expectations of 8.6%.
Total social financing (TSF)—a broader measure of credit and liquidity in the economy that includes loans, bonds and other non-traditional instruments—rose from CNY 1.04 trillion in July to CNY 1.52 trillion in August.
Analysts at Nomura highlight that:
“August data suggest government bonds and corporate bonds have been picking up thanks to intensive policy easing and stimulus measures in recent months, while the contraction of the shadow banking sector has moderated as Beijing has softened its deleveraging campaign. Stabilised growth in augmented aggregate financing in August maybe viewed as an important turning point. Still, markets may be disappointed by relatively moderate progress on the monetary side.”