News Column

Chinese New Loans, Money Supply Expand More Than Expected

July 15, 2014



BEIJING (Alliance News) - Bank lending as well as money supply growth in China exceeded expectations in June as Beijing beefed up measures to rejuvenate economic growth into the second quarter.

Bank lending increased notably to CNY 1.08 trillion in June from CNY 870.8 billion in May, data published by the People's Bank of China showed Tuesday. Lending was expected to rise moderately to CNY 955 billion.

In the first half of the year, banks lent CNY 5.74 trillion, up by CNY 659 billion from the same period of last year.

Total social financing, a broad measure of liquidity in the economy, came in at CNY 1.97 trillion in June, up from CNY 1.4 trillion in May.

M2, the broadest measure of money supply, advanced 14.7% year-on-year in June, the fastest since August, after rising 13.4% in May. The annual rate also exceeded the 13.6% expected by economists.

Further, foreign exchange reserves totaled USD3.99 trillion at the end of June compared to USD3.95 trillion in March.

The rebound in credit growth last month has more to do with a weak base for comparison due to the cash crunch last year, than with the current policy stance, Julian Evans-Pritchard, an economist at Capital Economics said.

According to Evans-Pritchard, continued large trade surpluses and net capital inflows will force the PBoC to intervene more heavily again to prevent rapid renminbi appreciation.

China's economic growth slowed to 7.4% in the first quarter, the weakest in one and a half years. The second quarter GDP figures are due on Wednesday. The second quarter growth is forecast to remain unchanged at 7.4%.

In June, the World Bank said China will meet its 7.5% GDP growth target this year despite growth moderating over the medium term because of gradual rebalancing.

As investors remain cautious about China's growth prospects, foreign direct investment grew only 0.2% to USD14.4 billion.

In the first half, China attracted USD63.3 billion in FDI, up 2.2% from last year, the Commerce Ministry said today.



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Source: Alliance News


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