China Money July 2016

China

China: New yuan loans decline significantly in July

August 12, 2016

Chinese banks extended CNY 464 billion (USD 69.8 billion) in new yuan loans in July, a two-year low which represented a substantial fall compared to the CNY 1.4 trillion registered in the previous month. July’s print also undershot the CNY 850 billion the markets had expected. In the 12 months up to July, new yuan loans totaled CNY 11.7 trillion (June: CNY 12.7 trillion).

Total social financing (TSF)—a broader measure of credit and liquidity in the economy that includes loans, bonds and other non-traditional instruments—plunged from CNY 1.6 trillion in June to CNY 488 billion in July. The print also represented a two-year low and undershot the CNY 800 billion the markets had expected.

Meanwhile, annual growth in M2—the broadest measure of money supply in China—moderated from 11.8% in June to 10.2%, which marked a 15-month low. The reading came in slightly below the 11.0% rise the markets had expected.

FocusEconomics Consensus Forecast participants expect M2 to expand 12.7% in 2016, which is down 0.1 percentage points over the previous month’s forecast. In 2017, the panel sees M2 growth of 11.7%.


Author: Ricard Torné, Head of Economic Research

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China Money July 2016

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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