China’s Credit Growth Slows

January 16, 2014 Leave a comment

China’s Credit Growth Slows

China’s broadest measure of new credit fell in December while money-supply growth and new yuan loans trailed estimates amid a cash crunch and government efforts to curb speculative lending.Aggregate financing was 1.23 trillion yuan ($204 billion), the People’s Bank of China said today in Beijing. That compared with 1.63 trillion yuan a year earlier. China’s foreign-exchange reserves, the world’s largest, rose to a record $3.82 trillion at the end of December from September’s $3.66 trillion.

A record decline in new credit in the second half is set to limit the pace of economic expansion this year as policy makers focus on controlling financial risks and implementing the broadest reforms since the 1990s. China’s debt buildup has evoked comparisons to Japan before its lost decade and the run-up to the Asian financial crisis.

“The picture going forward is for a slowdown in credit growth,” said Yao Wei, China economist at Societe Generale SA in Hong Kong. “The central bank has been intervening on a very large scale — there’s obviously immense pressure for the yuan to rise,” she said, commenting on the larger currency reserves.

New yuan loans were 482.5 billion yuan in December and M2 money supply rose 13.6 percent from a year earlier, the central bank said.

Analysts surveyed by Bloomberg projected aggregate financing of 1.14 trillion yuan, new local-currency loans of 570 billion yuan and money-supply growth of 13.9 percent, based on median estimates.

The benchmark Shanghai Composite Index (SHCOMP) of stocks fell 0.3 percent at 10:44 a.m. local time. The yuan weakened 0.04 percent to 6.0439 per dollar and has increased about 2.8 percent in the past 12 months.

To contact Bloomberg News staff for this story: Scott Lanman in Beijing at slanman@bloomberg.net; Xiaoqing Pi in Beijing at xpi1@bloomberg.net

Filed under Macro Trends

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