China Money December 2019


China: New yuan loans fall in December, while M2 growth accelerates

January 16, 2020

In December, Chinese banks distributed CNY 1.14 trillion (USD 165 billion) in new yuan loans, below the CNY 1.39 trillion recorded in November and broadly in line with the CNY 1.19 trillion that market analysts had expected. In the 12 months up to December, new yuan loans totaled CNY 16.8 trillion (12 months to November: CNY 16.8 trillion).

Meanwhile, annual growth in M2—the broadest measure of money supply in China—rose from November’s 8.2% to 8.7% in December. The print overshot the 8.3% increase that market analysts had expected and the strongest reading in nearly two years.

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 1.99 trillion in November to CNY 2.10 trillion in December. Market analysts had expected a softer increase in TSF to CNY 1.70 trillion.

FocusEconomics Consensus Forecast participants expect M2 to expand 8.4% in 2020, which is unchanged from last month’s forecast. In 2021, the panel also sees M2 growth of 8.1%.

Author: Ricard Torné, Lead Economist

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China Money Chart

China Money December 2019

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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