New yuan loans slow on funds crux
Print Edition
China’s new yuan loans slowed in December amid a liquidity squeeze while the rise in money supply also eased as part of the government’s efforts to rely less on credit expansion for economic growth.
New yuan lending slowed to 482.5 billion yuan (US$79.8 billion) last month from 624.6 billion yuan in November. For 2013, banks extended 8.9 trillion yuan of new loans in total, the People’s Bank of China said in a statement on its website yesterday.
M2, the broad measure of money supply, rose at a slower pace of 13.6 percent year on year at the end of last December, down from a 14.2 percent increase a month earlier and 13.8 percent in 2012.
“M2 money supply growth slowed steadily to 13.6 percent last year. However it’s slightly over the official target of 13 percent,” Qu Hongbin, chief economist for China at HSBC, said in Shanghai yesterday.
“The expansion of M2 should be viewed with GDP growth and inflation rate. Taking that into account, we think China’s credit growth is appropriate. And we anticipate M2 growth to remain at the same level this year between 13 and 14 percent,” Qu said.
Zhu Haibin, chief economist of JPMorgan for China, said in a note yesterday that China’s credit tapering will continue in 2014.
“We expect bank loans to increase by 9.8 trillion yuan and M2 growth at 13.1 percent in 2014,” Zhu said.
The tapering will dent economic growth due to lower credit supply and higher interest rates.
China’s total social financing, a broad measure of liquidity in the market, totaled 1.23 trillion yuan in December. For 2013, the figure was 17.3 billion yuan — a sharp drop in growth from 23 percent in 2012 to 9 percent.
The proportion of traditional bank loans in the total social financing fell to 51 percent in 2013, compared with more than 90 percent a decade ago.
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