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February 15, 2017

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Total new credit hits high in China

CHINA saw a record total new credit in January, while new yuan loans were the second-highest on record.

Total social financing, the broadest measure of credit supply that includes loans, bank acceptance bills, corporate bonds and equity financing, rose to 3.74 trillion yuan (US$545 billion) in January, the People’s Bank of China said in a statement yesterday.

The amount was 2.1 trillion yuan more than December’s and 261.9 billion yuan more than that in January last year.

The new credit also exceeded market expectations of 3 trillion yuan, according to a Bloomberg News poll.

Despite the second-highest monthly tally, new yuan lending by banks totaled 2.08 trillion yuan last month, 475.1 billion yuan less than the record pace in January last year and market estimates of 2.44 trillion yuan.

M2, the broad measure of money supply, added 11.3 percent from a year earlier, the same pace as the prior month.

Analysts said the large amount of new credit indicated strong demand from the real economy and helped sustain economic stability in the first half of this year.

The smaller-than-expected new banks loans, however, echoed with earlier reports that the central bank stepped in last month to restrain the size of lending to prevent excessive credit expansion.

“The large amount of new credit was partly due to seasonal reasons but it also pointed to strong demand from companies and residents,” said Liu Dongliang, an analyst with China Merchants Bank.

“The central bank has room to keep a relatively tight monetary policy amid rapid credit expansion and a pickup in inflation.”

The National Bureau of Statistics released data yesterday to show China’s consumer prices rose to 2.5 percent, the highest in nearly three years while factory inflation grew the fastest in five years.

Liu said the central bank will likely further raise interest rates in its lending facilities and open market operations to prevent financial risks.


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