Money sup­ply, credit growth boost sta­bil­ity

The Myanmar Times - Weekend - - International Business -

CHINA’S money sup­ply growth ex­ceeded ex­pec­ta­tions last month and credit in­creased, fur­ther bol­ster­ing sta­ble eco­nomic growth, the cen­tral bank said on Wed­nes­day.

In Septem­ber, the broad money sup­ply, known as M2, in­creased by 8.3 per­cent from a year ear­lier, up from an­nual growth of 8.2 per­cent in Au­gust, ac­cord­ing to the Peo­ple’s Bank of China.

New loans in ren­minbi stood at 1.38 tril­lion yuan ($199.2 bil­lion) in Septem­ber, up from 1.28 tril­lion yuan in Au­gust. The out­stand­ing yuan-de­nom­i­nated loans had reached 133.27 tril­lion yuan by the end of the third quar­ter, a year-on-year growth of 13.2 per­cent, the PBOC re­ported.

The coun­try’s real econ­omy, sup­ported by do­mes­tic non­fi­nan­cial cor­po­ra­tions and lo­cal house­holds, ab­sorbed 2.21 tril­lion yuan from the fi­nan­cial sec­tor last month, re­sult­ing in the monthly in­cre­ment in to­tal so­cial fi­nanc­ing.

Septem­ber was the first time the cen­tral bank had in­cluded lo­cal gov­ern­ment spe­cial-pur­pose bonds in its cal­cu­la­tion of to­tal so­cial fi­nanc­ing. The spe­cial bonds were is­sued mainly to raise funds for in­fra­struc­ture con­struc­tion, as the coun­try’s fixed-as­set in­vest­ment slowed in the year’s first half.

“The is­suance of lo­cal gov­ern­ment spe­cial bonds has ac­cel­er­ated since Au­gust,” which has had no­table in­flu­ence on banks’ lend­ing and cor­po­rate bonds, said Zhang Wen­hong, deputy di­rec­tor of the cen­tral bank’s sur­veys and statis­tics de­part­ment.

In Septem­ber, lo­cal gov­ern­ments is­sued spe­cial bonds amount­ing to 738.9 bil­lion yuan, al­most dou­bling the Au­gust fig­ure and ac­count­ing for 33.5 per­cent of the monthly in­crease in to­tal so­cial fi­nanc­ing, the cen­tral bank said.

To off­set do­mes­tic eco­nomic down­side risks and ex­ter­nal head­winds amid trade ten­sions, the PBOC has en­acted four re­duc­tions of re­serve re­quire­ment ra­tios for fi­nan­cial in­sti­tu­tions this year, with the lat­est tak­ing ef­fect on Mon­day. The cuts have in­jected some 1.85 tril­lion yuan into the fi­nan­cial sec­tor since April.

Some economists ex­pressed con­cerns that faster ex­pan­sion of the money sup­ply and credit might add in­fla­tion pres­sure, though mone­tary au­thor­i­ties have re­it­er­ated that there will be no change in the “pru­dent and neu­tral” pol­icy stance.

Over the week­end, Yi Gang, the cen­tral bank gover­nor, said the cur­rent quan­tity and growth rate of money and credit in China were at “ap­pro­pri­ate” lev­els and would main­tain sta­ble prices. He fore­cast that the an­nual in­fla­tion level would be slightly higher than 2 per­cent.

“De­spite a less be­nign in­fla­tion­ary en­vi­ron­ment, we ex­pect that sta­bi­liz­ing growth will be the most im­por­tant goal for mone­tary pol­icy in the near fu­ture,” said Li Zhen­nan, an econ­o­mist with Gold­man Sachs (Asia).

– China Daily

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