China: Money supply records lowest growth since September 2021 in March
In March, Chinese banks distributed CNY 3090 billion in new yuan loans, up from September’s 1450 billion figure but below market expectations. Money supply grew 8.3% in year-on-year terms in March, which was a deterioration from February’s 8.7% increase. The outturn marked the worst reading since September 2021. Meanwhile, the stock of total social financing (TSF)—a broader measure of credit and liquidity in the economy that includes loans, bonds and other non-traditional instruments—increased 8.7% in the month (February: 9.0% yoy). Slowing credit growth so far this year is likely partly the result of the central government’s push to restrain public debt.
On the reading, Nomura analysts said:
“Filtering out the shifting Chinese New Year effect, government bond issuance in the first three months of the year has been RMB469bn short of the level a year ago, reflecting Beijing’s highly disciplined fiscal stance so far this year. […] This latest underwhelming March credit data report lends further support to our view that markets may still need to be cautious about the near-term outlook and it is not yet the time for Beijing to be complacent.”