Bank lending surges but M2 and TSF slow
Print Edition
BANKS in China lent 1.47 trillion yuan (US$235.2 billion) in January, a monthly record since mid-2009, but money supply and total social financing slowed, underscoring the still sluggish economic momentum.
The new yuan loans last month were 289.9 billion yuan more than January last year, and more than double the new lending in December, the People’s Bank of China said in a statement yesterday.
The figure also beat a Reuters poll for 1.35 trillion yuan.
But the growth of M2, a broad measure of money supply, last month slowed to 10.8 percent year on year from 12.2 percent in December and from 13.2 percent in January last year.
Total social financing, the broadest measure of credit supply that includes loans, bank acceptance bills, corporate bonds and equity financing, fell 539.4 billion yuan annually to 2.05 trillion yuan in January.
Analysts said the weak money supply and social financing data indicate China’s economic growth will remain relatively cool in the near term.
“The surge in bank lending possibly resulted from policy support for investment projects and a seasonal increase in credit supply,” said Liu Dongliang, senior analyst of the China Merchants Bank.
“A decline in M2 is usually related to ebbing investment sentiment from companies, and I think the relatively weak economic conditions will remain.”
The January credit data echoed with recent economic indicators pointing to a protracted slowdown in China.
Worries over ebbing domestic demand were reignited last week when official data showed January’s imports slumped 20 percent from a year ago and inflation hit a five-year low.
“In order to maintain a reasonable money supply, we see that China’s central bank will continue to inject liquidity. We see that further monetary policy easing could be imminent,” ANZ said in a note to clients.
ANZ said the PBOC could cut the ratio of cash that banks must set aside as reserves by another 100 basis points, and trim deposit rates by another 50 basis points, Reuters said.
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