Bloomberg News

China’s Aggregate Financing Declines in First Nine Months

October 20, 2011

(Updates with breakdown of financing from fifth paragraph)

Oct. 20 (Bloomberg) -- A measure of financing in China dropped 11.4 percent to 9.8 trillion yuan ($1.53 trillion) in the first nine months from a year earlier, the central bank said.

Aggregate financing, which includes bank lending, off- balance sheet loans and bond and stock sales, compared with 7.76 trillion yuan in the first half of the year, according to data posted on the People’s Bank of China website today.

The central bank introduced the new gauge this year to get a clearer picture of credit creation that’s fueled inflation and property speculation. Growth in banks’ wealth management products and off-balance sheet lending has distorted money- supply data as it doesn’t capture the credit created through these avenues, according to banks including Barclays Capital and Standard Chartered Plc.

The central bank said last month the current measure of broad money supply, M2, may be underestimating growth and it is working on a new measure, which it described as M2+, to better reflect developments in financial markets.

Yuan-denominated lending accounted for 58 percent of aggregate financing in the first nine months, 1 percentage point higher than a year earlier, and compared with 53.7 percent in the first half, according to today’s central bank data.

Entrusted loans made up 10.9 percent of financing, 6.3 percentage points higher than the same period last year and compared with 9.1 percent in the first half. Corporate bonds accounted for 8.6 percent, down 0.3 percentage point from a year earlier and little changed from the end of June, the data show.

It will take time for the central bank to decide whether the gauge can be used as a monetary policy target, Sheng Songcheng, the head of the PBOC’s statistics department, said in April. The measure is compiled from statistics provided by government agencies including central bank, the National Development and Reform Commission and the China Securities Regulatory Commission, according to today’s statement.

--Zheng Lifei, Jing Jin. Editors: Nerys Avery, Paul Panckhurst

To contact Bloomberg News staff on this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net


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