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China Money August 2020

China: New loans increase in August

In August, Chinese banks distributed CNY 1.28 trillion (USD 187 billion) in new yuan loans. The reading came in above both the CNY 993 billion recorded in July and the CNY 1.22 trillion that market analysts had expected. In the 12 months up to August, new yuan loans totaled CNY 19.2 trillion (12 months to July: CNY 19.2 trillion).

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 1.69 trillion in July to CNY 3.58 trillion in August. Market analysts had expected a softer increase in TSF to CNY 2.59 trillion.

Annual growth in M2—the broadest measure of money supply in China—decreased from July’s 10.7% to 10.4% in August. The result was below the 10.7% increase that market analysts had expected.

The slowdown in M2 growth reflected more targeted monetary policy in order to avoid stock market bubbles.

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