China Money January 2016


China: New loans soar to record high ahead of the Lunar New Year holidays

February 16, 2016

New yuan loans totaled CNY 2.5 trillion (USD 390 billion) in January, which came in well above the CNY 598 billion registered in the previous month. January’s reading overshot the CNY 1.9 trillion the markets had expected and represented a record high. In the 12 months up to January, new yuan loans totaled CNY 12.8 trillion (December: CNY 11.7 trillion), which also marked an all-time high. The surprisingly strong reading mainly reflected a seasonal spike ahead of the Lunar New Year holidays in early February, Chinese authorities’ attempt to bolster growth and that banks usually front-load their lending quota at the beginning of the year to protect their market share.

Total social financing—a broader measure of liquidity in the economy that includes loans, bonds and other non-traditional instruments—rebounded from CNY 1.8 trillion in December to CNY 3.4 trillion in January.

Meanwhile, annual growth in M2—the broadest measure of money supply in China—ticked up from 13.3% in December to 14.0% in January, beating market expectations of 13.5% and hitting a 19-month high.

FocusEconomics Consensus Forecast participants expect M2 to expand 11.9% in 2016, which is up 0.1 percentage points over the previous month’s forecast. In 2017, the panel sees M2 growth of 10.8%.

Author: Ricard Torné, Lead Economist

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China Money Chart

China Money January 2016 0

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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