China’s February New Yuan Loans Were a Lower-Than-Estimated $113 Billion
China’s new yuan loans were less than estimated in February and money supply growth was below the government’s target, central bank data showed yesterday, raising the odds of policy easing to support credit.
Local-currency-denominated loans were 710.7 billion yuan ($113 billion) last month, the People’s Bank of China said in a statement on its website yesterday. That compares with the 750 billion yuan median estimate in a Bloomberg News survey of 26 economists and 738 billion yuan in January. M2, the broadest measure of money supply, expanded 13 percent in February from a year earlier.
Premier Wen Jiabao may step up efforts to support economic expansion after inflation slowed more than estimated in February while industrial output and retail sales growth weakened. Commerce Minister Chen Deming signaled this week that exports in February may also have been lower than economists forecast.
“With banks’ deposit growth unlikely to accelerate and inflationary pressures continuing to ease, further reserve- requirement ratio cuts will be needed to maintain stable economic growth,” Jing Ulrich, managing director and chairman of global markets for China at JPMorgan Chase & Co., said before the release. She expects two more reductions in the first half.
The central bank cut the amount of cash lenders must set aside as reserves in February for the first time in three months to support lending and sustain growth after new lending in January was the lowest for that month in five years.
Weaker Output Growth
Inflation eased to 3.2 percent in February from a year earlier, the lowest in 20 months, as food prices moderated, a statistics bureau report showed yesterday. Industrial output in the first two months of the year rose 11.4 percent, the smallest increase for January and February combined since 2009.
Economic data in the first two months are distorted by the timing of a weeklong Chinese New Year Holiday, which fell in January this year and February in 2011.
Wen this week set a target of 14 percent growth for M2 in 2012, compared with a 16 percent goal last year, as the government vowed to maintain a prudent monetary policy. The broad measure of money supply grew 13.6 percent last year.
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