Bloomberg News

China’s Aggregate Financing Almost Halved in January, PBOC Says

February 17, 2012

Feb. 17 (Bloomberg) -- China’s aggregate financing, a measure of funding that includes bank lending, bond and stock sales, fell by almost half in January from a year earlier, the central bank said today.

The indicator was 955.9 billion yuan ($152 billion) last month, compared with 1.76 trillion yuan in the same month last year, according to preliminary data released by the People’s Bank of China on its website. This is the first time the central bank has released a monthly figure since it started publishing the data in April 2011.

Slower credit expansion may add to concerns the world’s second-biggest economy will see a deeper slowdown as Europe’s debt crisis hurts exports and a cooling property market damps domestic demand. The central bank introduced the new gauge last year to get a clearer picture of credit creation in the economy.

The drop “may have been partly caused by the week-long Chinese New Year holiday as it took several working days off the month,” said Cui Li, a Hong Kong-based economist at Royal Bank of Scotland Plc who previously worked at the International Monetary Fund. “It also signals there was not as much loosening as the market had expected.”

The central bank said in a quarterly monetary policy report released on Feb. 15 that it will maintain appropriate growth in lending and keep a “reasonable scale” of aggregate financing this year. Aggregate financing was 12.83 trillion yuan last year.

Monetary Conditions

M2, the broadest measure of money supply, may have underestimated monetary conditions in the economy, the PBOC said in its monetary policy report, adding the indicator will probably expand about 14 percent this year.

That compares with a 13.6 percent increase in 2011 and the 16 percent target Wen Jiabao set for M2 last year in his work report to parliament in March.

Growth in banks’ wealth management products and off-balance sheet lending has distorted money-supply data which don’t capture credit created through these channels, according to banks including Barclays Capital and Standard Chartered Plc.

Yuan-denominated loans accounted for 77.2 percent of aggregate financing last month, compared with 58.3 percent for the whole year in 2011, calculations by Bloomberg News based on the central bank’s data show.

January’s new lending was 738 billion yuan, the central bank said last week. The figure, which compared with 1.04 trillion yuan in the same period last year and the 1 trillion yuan median estimate in a Bloomberg News survey, was the lowest January lending in five years.

Lending Guidance

Banks moving deposits and credit off their balance sheets may have been one reason for the decline, UBS AG economist Wang Tao said in a note today. She also cited reports of weaker credit demand and government guidance on lending.

Domestic stock sales by non-financial companies contributed 8.1 billion to aggregate financing last month, 65 billion yuan less than the same time last year, the central bank said.

Undiscounted bankers acceptances fell 21.2 billion yuan last month after increasing 315.7 billion in January last year, the central bank data show. Loans denominated in foreign currencies fell 14.8 billion yuan, compared with an 86.2 billion yuan increase last January. Net corporate bond issuance contributed 44.2 billion yuan, 57 billion yuan less than last year.

Aggregate financing data are compiled from statistics provided by government agencies including the central bank, the National Development and Reform Commission and the China Securities Regulatory Commission.

--Zheng Lifei. Editors: Nerys Avery, John Liu

To contact Bloomberg News staff on this story: Zheng Lifei in Beijing at

To contact the editor responsible for this story: Paul Panckhurst at

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