Banks lend more and M2 quickens
Print Edition
BANKS in China lent surprisingly more last month and money supply accelerated as the country’s relaxed fiscal and monetary policies started to take effect.
New yuan loans totaled 1.02 trillion yuan (US$163 billion) in February, up 376.8 billion yuan from January, the People’s Bank of China said in a statement yesterday.
The loans granted were also above economists’ forecasts for 750 billion yuan, according to a Reuters poll.
Total social financing, the broadest measure of credit supply that includes loans, bank acceptance bills, corporate bonds and equity financing, totaled 1.35 trillion yuan, 709.9 billion yuan below January’s but 460.8 billion yuan more than February last year.
February had fewer working days this year due to a weeklong Spring Festival holiday.
M2, the broadest measure of money supply, rose 12.5 percent from a year earlier, just above the official annual target of 12 percent.
China International Capital Corp attributed the faster money supply and credit growth to the impact from the monetary and fiscal easing measures.
“Fiscal deposits recorded a surprising decline of 470.5 billion yuan, marking a key factor in driving up the M2 reading,” CICC said in a note yesterday.
“It indicated that fiscal spending has helped stabilize growth.”
The easier monetary policies have boosted credit and the long-term new debts made up half of the new lending, the note added.
But CICC said the exceptional growth in February may not be sustainable as companies’ demand for credit remained limited amid a cooling economy and declining prices.
Central bank Governor Zhou Xiaochuan yesterday reiterated that China is sticking to a prudent monetary policy. Although he ruled out significant stimulus measures, he said the PBOC will use new liquidity tools to support the economy.
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