China’s Credit Expansion Beats Estimates on PBOC Easing Measures

China’s broadest measure of new credit grew more than economists estimated in May, as the effects of monetary easing took hold.

Aggregate financing, which includes bank loans and off-balance credit, was 1.22 trillion yuan ($197 billion), the People’s Bank of China said Thursday. That compares with the median estimate of 1.13 trillion yuan in a Bloomberg survey. New yuan loans were 900.8 billion yuan, compared with a survey forecast of 850 billion yuan.

Improving lending could ease policy makers’ concern that banks aren’t pumping enough money into the slowing economy. Weak demand and a crackdown on shadow banking had led to subdued credit flows this year even as the PBOC cut interest rates three times since November and reduced bank’s reserve ratio requirements.

“This round of rate-cut cycle is coming close to an end,” Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong, wrote in a report before the release. “We expect the PBOC will shift the focus of monetary policy operation towards quantitative measures, especially using targeted quantitative measures to support certain sectors.”

M2 money supply rose 10.8 percent from a year earlier in May, the central bank data showed.

— With assistance by Xiaoqing Pi

Before it's here, it's on the Bloomberg Terminal. LEARN MORE