Money supply growth decelerates
Print Edition
CHINA’S money supply in March grew at its slowest pace in 13 years while total social financing in the first quarter shrank from last year, the People’s Bank of China announced yesterday.
Economists said the results are a reflection of the government’s reform tasks, and that monetary authorities may take a neutral stance while taking “fine-tuning” measures to support economic growth.
M2, a broad measure of money supply that covers cash in circulation and all deposits, increased 12.1 percent year on year, missing this year’s official target of 13 percent. It was the slowest since May 2001 and well below February’s 13.3 percent.
Analysts attributed the slowdown to the cooling in fundraising activities and a high base figure last year.
“The slowdown is partly the result of rebalancing measures the government has taken,” said Liu Feng, a researcher with Southwest Securities Co. “It is also related to regulators’ tightening measures on shadow banking activities.”
Zhang Zhiwei, chief China economist with Japan’s Nomura Securities, cited weak capital inflows on account of the yuan’s depreciation against the US dollar for the slower monetary supply.
Domestic banks extended 1.05 trillion yuan (US$169 billion) in new lending in March, above February’s 644.5 billion yuan but lower than the 1.17 trillion yuan in March last year, the central bank said.
Total social financing, a broad measure of liquidity in the economy, was 5.6 trillion yuan in the first quarter, 561.2 billion yuan less than in the same period of last year, PBOC data showed.
Economists said the central bank may keep a neutral monetary stance with some fine-tuning measures, including stabilizing interbank borrowing rates and the yuan exchange rate.
“We maintain our forecast of 9.8 trillion yuan of bank loans and 18.5 trillion yuan of total social financing in 2014, and expect policy rates will stay unchanged,” JPMorgan China chief economist Zhu Haibin wrote in a note. “The policy fine-tuning is reflected in the latest band-widening of yuan exchange rates.”
The central bank yesterday said China’s foreign exchange reserves rose to US$3.95 trillion at the end of March, up US$130 billion from December.
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