China’s expansion in M2 improves
Print Edition
MONEY supply in China picked up in April while social financing fell, indicating a cooling economy.
Banks in China extended 774.7 billion yuan (US$124.2 billion) in new yuan loans in April, below 1.05 trillion yuan a month earlier and 792.3 billion yuan a year ago, the People’s Bank of China said in a statement yesterday.
That also missed market hopes for 880 billion yuan, according to a Reuters poll.
But growth in M2, a broad measure of money supply, rose to 13.2 percent in April from 12.1 percent in March, which was the weakest since 1999.
The official annual target was set at 13 percent.
“The M2 growth has greatly improved from March as it beats our expectations,” said Liu Dongliang, senior analyst of China Merchants Bank.
“If the growth maintains at the current pace, the economy is likely to stabilize in the second and third quarters, and that also rules out any possibility for monetary policies to ease.”
He attributed the lower credit data to liquidity tightening by banks and weaker demand from companies.
Total social financing, the broadest measure of credit supply including loans, bank acceptance bills, corporate bonds and equity financing, was 1.55 trillion yuan in April. That was down from 2.07 trillion yuan in March and 1.75 trillion yuan in the same period of last year.
The drop was due to ongoing regulatory efforts in controlling financial risks from shadow banking activities, Liu said.
The central bank reiterated last week in its first-quarter monetary report that it would keep a steady monetary policy and timely fine-tuning to stabilize economic growth.
President Xi Jinping said on a visit to Henan Province on Saturday that the nation needs to adapt to a “new normal” of a slower economic growth.
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