July loans less than expected
By Zhang Fengming |
August 12, 2010, Thursday
|
Print Edition
Print Edition
Banks in China extended a smaller-than-expected 532.8 billion yuan (US$78.6 billion) in new yuan loans last month, the central bank said yesterday.
The new credit in July was down from June's 603.4 billion yuan, according to data posted by the People's Bank of China on its website.
M2, the broadest money supply, including deposits and cash, grew 17.6 percent in July from a year ago, taming from June's 18.5 percent.
Monetary growth has been slowing since hitting a record 29.6 percent in November.
"The slowdown in monetary growth was sharper than expected, consistent with weaker-than-expected growth in other July data," said Nikhilesh Bhattacharyya, a Moody's Economy.com associate economist.
China yesterday also posted its July data on industrial output and fixed-asset investment, which showed a dip in growth.
"The slowdown of July money growth is a welcome sign for policy makers concerned about monetary growth feeding into inflation," Bhattacharyya added.
China's Consumer Price Index, a gauge for inflation, grew 3.3 percent in July, up 0.4 percentage point from a month ago. China is targeting a whole-year inflation of under 3 percent.
Over the coming months, money supply growth is expected to remain fairly stable, he said.
However, the new credit in July was up sharply from the 355.9 billion yuan credit a year ago, suggesting that credit creation is still taking place at a strong pace.
The central bank said earlier that it would maintain its appropriately loose monetary policy in the second half but with a tough stance in certain areas such as high-polluting industries and the real estate sector.
China has already hiked its reserve requirement ratio to drain liquidity earlier this year. The interest rates remained untouched since 2009.
"Monetary policy remains fairly expansionary," Bhattacharyya said. "It will help sustain credit growth even as economic growth slows during the second half of the year and borrowing for property purchases ease in line with government directives."
China targets money supply growth of 17 percent for this year and expects whole-year new credit of 7.5 trillion yuan.
The new credit in July was down from June's 603.4 billion yuan, according to data posted by the People's Bank of China on its website.
M2, the broadest money supply, including deposits and cash, grew 17.6 percent in July from a year ago, taming from June's 18.5 percent.
Monetary growth has been slowing since hitting a record 29.6 percent in November.
"The slowdown in monetary growth was sharper than expected, consistent with weaker-than-expected growth in other July data," said Nikhilesh Bhattacharyya, a Moody's Economy.com associate economist.
China yesterday also posted its July data on industrial output and fixed-asset investment, which showed a dip in growth.
"The slowdown of July money growth is a welcome sign for policy makers concerned about monetary growth feeding into inflation," Bhattacharyya added.
China's Consumer Price Index, a gauge for inflation, grew 3.3 percent in July, up 0.4 percentage point from a month ago. China is targeting a whole-year inflation of under 3 percent.
Over the coming months, money supply growth is expected to remain fairly stable, he said.
However, the new credit in July was up sharply from the 355.9 billion yuan credit a year ago, suggesting that credit creation is still taking place at a strong pace.
The central bank said earlier that it would maintain its appropriately loose monetary policy in the second half but with a tough stance in certain areas such as high-polluting industries and the real estate sector.
China has already hiked its reserve requirement ratio to drain liquidity earlier this year. The interest rates remained untouched since 2009.
"Monetary policy remains fairly expansionary," Bhattacharyya said. "It will help sustain credit growth even as economic growth slows during the second half of the year and borrowing for property purchases ease in line with government directives."
China targets money supply growth of 17 percent for this year and expects whole-year new credit of 7.5 trillion yuan.
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