Free Trial

(M2) Correction Extends


Late Session Rebound


(M2) Corrective Cycle Remains In Play


(M2) Gains Still Considered Corrective

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access
MNI (London)
--March M2 rose 8.2%, New Loans CNY1.12 trln; TSF grew CNY1.3 trln
     BEIJING (MNI) - China's lower M1 and M2 growth in March, along with slower
credit growth, has raised concerns for further economic pressure down the road.
     Money supply as measured by M2, rose 8.2% year on year to CNY173.99
trillion, below market expectations of an 8.9% gain and lower than the 8.8%
growth in January.
     The lower M2 growth was caused by weaker growth in corporate deposits,
which rose CNY1.17 trillion, lower than CNY1.29 trillion last year.
     M1 growth continued to slow in March at 7.1% y/y compared with 8.5% in
February and 18.8% in March last year. This year's data was the lowest since
July 2015. 
     This is the second consecutive month that M1 has grown slower than M2, a
possible warning sign that companies have transferred more funds from checking
accounts to savings accounts. This may signal companies' have less intention to
invest or expand production (for which they would need more working capital in
checking accounts). Whether this phenomenon lasts would worth attention in
coming months.
     A total CNY1.12 trillion of new loans were issued in March, higher than the
CNY1.02 trillion recorded in March 2017, but below the MNI market survey median
of CNY1.2 trillion, suggesting the demands for loans remains largely stable and
some banks are converting their non-standard assets into loans, in line with
regulator directions.
     Short-term and long-term household lending increased CNY203.2 billion and
CNY377 billion respectively, compared with increase of CNY344.3 billion and
CNY450.3 billion last March. Despite being weaker than last year, the slowdown
isn't large enough to indicate significant mortgage slowing.
     Short-term and long-term corporate loan issuance rose CNY82.9 billion and
461.5 billion respectively in March, both lower than the respective CNY192
billion and 548.2 billion seen in March last year.
     Note financing decreased CNY11.9 trillion in March, better than the
decrease of CNY389.3 trillion seen last March. Combining note financing and
loans to the corporate sector, total financing to real economy grew CNY181.6
trillion in March y/y.
     Total social financing (TSF) grew CNY1.33 trillion in March, below the MNI
median forecast of CNY1.7 trillion and much lower than CNY2.12 trillion last
     Shadow banking sector loans contracted sharply this month, under pressure
from regulators. Entrusted Loans, trust loans and undiscounted bankers'
acceptances decreased CNY185 billion, CNY35.7 billion and CNY31.8 billion,
respectively, in March. That compared with respective growth of CNY203.9
billion, CNY311.3 billion and CNY239 billion in March 2017.
     Direct funding, including bond and stock issuance, increased CNY344.4
billion and CNY40.4 billion respectively in March, compared with the growth of
CNY12.9 billion and CNY80 billion in the year ago period.
     The current direct funding cannot fill the funding hole left by the
contracting shadow banking loans, which will indicate further downward pressure
on the economy because of lower credit growth, and the refinancing risks for
companies, especially those with low profiles, will rise significantly.
     However, TSF does not include all funding measures, and funding measures
including ABS and special project bonds need to be watched to have a better
gauge of total credit growth.
--MNI Beijing Bureau; +86 10 85325998; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
MNI London Bureau | +44 203-865-3812 |

To read the full story

Why Subscribe to

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.