M2 Growth Fell to 9.4% at June's End; Slowdown May Be Part of New Normal, PBOC Says
Xu Yanyan
/SOURCE : Yicai
M2 Growth Fell to 9.4% at June's End; Slowdown May Be Part of New Normal, PBOC Says

(Yicai Global) July 13 -- Broad money supply (M2) growth in China remained relatively low at the end of June, and slower M2 growth may be the 'new normal' going forward, latest financial statistics released by China's central bank show.

As of the end of last month, M2 growth had dropped to 9.4 percent, a 0.2-percentage-point decrease from 9.6 percent in May, the People's Bank of China (PBOC) said yesterday.

Slowing broad money supply growth may be the new normal, and people should not overreact to it, said Ruan Jianhong, head of the PBOC's survey and statistics department.

A recent slowdown in off-balance-sheet funding practices among commercial banks has led to a decline in related deposits and M2 growth as a natural result of deleveraging within the financial system, Ruan said. If the financing needs of the real economy are reasonably satisfied, a lower M2 increase rate indicates more efficient money stock turnover.

The central bank will stick to the prudent and neutral monetary policy, maintain stable liquidity, and ensure steady growth of monetary lending and private financing, he said.

Tightened government regulations that were introduced late last year have caused housing loan growth to stall, meaning the policies have curbed the property bubble, Ruan said.

The growth rates of housing loan balances and new housing loans (as a percentage of the total amount of new loans) have declined. Outstanding yuan-denominated real estate loans were up 24.2 percent year-on-year to USD4.28 trillion (CNY29.72 trillion) at the end of June, marking growth 2.8 percentage points slower than that recorded at the end of last year.

The value of new mortgages granted in the first half amounted to CNY3.04 trillion, accounting for 38.1 percent of the total value of all new loans taken out in the period, a 6.7-percentage-point decrease compared with the proportion for the full year of 2016.

"During the first half, slowing housing loan growth, falling personal mortgage loan-to-value ratios and shorter mortgage durations helped ease the property bubble and facilitate the steady and healthy development of the real estate market," Ruan said.

Follow Yicai Global on
Keywords: Financial Data , Central Bank , Monetary Policy , Money Supply , PROPERTY MARKET