China Speeds Up The Rate of Monetary Expansion In August
(For August 2010)
My impression from the August China macroeconomic data is that the Chinese government has speed up monetary expansion while keeping tight grip on real-estate and equity markets. The August speed up means that either the rate of expansion will slow down in the last quarter of 2010 or Chinese targets for this year will be breeched.
The most broad measure of money supply – M2 rose 19.2% YoY in August vs. 17.5% consensus and 17.6% growth in July. Slight tick up in money supply growth.
Chart 1. China Monetary Aggregates
Source: Bloomberg
China new loans rose CNY 545.8 billion in August vs. CNY 532.8 billion in August and consensus of CNY 500.0 billion. Total new loans for this year are currently at CNY 5.7 trillion; 76% of the annual target. If POBC intends to live up its target the monthly new loan issuance for the rest of the year has to be bellow CNY 450.0 billion.
Chart 2. China New Loans
Source: Bloomberg
China fixed asset investments rose 24.8% in August; the consensus was at 24.6%, July reading was at 24.9%.
Chart 3. China Fixed Assets Investment
Source: Bloomberg
China Fixed Assets Investment, China Loan Issuance, China Money Supply