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August 13, 2019

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M2 up 8.1%, yuan loans fall in July

China’s new yuan-denominated loans stood at 1.06 trillion yuan (US$151 billion) in July, 397.5 billion yuan less than the same period last year, central bank data showed yesterday.

The M2, a broad measure of money supply that covers cash in circulation and all deposits, rose 8.1 percent year on year to 191.94 trillion yuan at the end of July, according to the People’s Bank of China.

The M2 growth was 0.4 percentage points slower than the level at the end of June and the same period last year.

The narrow measure of the money supply (M1), which covers cash in circulation plus demand deposits, rose 3.1 percent year on year to 55.3 trillion yuan by the end of last month.

M0, the amount of cash in circulation, increased 4.5 percent year on year to 7.27 trillion yuan by the end of July.

Newly added social financing, a measurement of funds that individuals and non-financial firms get from the financial system, stood at 1.01 trillion yuan in July, compared with 2.26 trillion yuan in June.

Household loans, mostly mortgages, fell to 511.2 billion yuan in July from 671.7 billion yuan in June, while corporate loans tumbled to 297.4 billion yuan from 910.5 billion yuan.

Outstanding yuan loan grew 12.6 percent from a year earlier.

By the end of July, China’s outstanding total social financing rose 10.7 percent year on year to 214.13 trillion yuan.

Growth of outstanding total social financing, a broad measure of credit and liquidity in the economy, slowed to 10.7 percent in July from a year earlier and from 10.9 percent in June.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank-lending system, such as initial public offerings, loans from trust companies and bond sales. In July, TSF fell to 1.01 trillion yuan from 2.26 trillion yuan in June.

Chinese regulators have been trying to boost bank lending and lower financing costs for over a year, especially for smaller and private companies which generate a sizeable share of the country’s economic growth and jobs.

Chinese banks usually make fewer loans in July after ramping up lending in June but the data was lower than the tally in July 2018, when banks doled out 1.45 trillion yuan in new loans.


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