China | August credit data expanded faster than expected

Summary

China’s August credit data bounced back from the previous readings driven by the robust new RMB loans, government bonds and net corporate bond financing. However, the authorities' attention to normalize easing monetary measures is still in place.

Key points

• Key points:
• August’s total social financing (TSF), a broad measure of credit and liquidity in the economy rebounded to RMB 3,580 billion, above the market consensus. In growth terms, total social financing accelerated from 12.9% yoy in July to 13.3% yoy in August.
• Growth rates of bank loans, government bonds and corporate bond financing remain robust.
• New yuan loans increased significantly to RMB 1459.7billion in August from RMB 969.7 billion recorded a month ago, mainly due to the pick-up of seasonal loans and the gradual recovery of domestic demand.
• By contrast, August’s M2 growth slowed to 10.4% y/y in August from 10.7% y/y in July while M1 growth picked up to 8% due to the ongoing improvement of industrial profit, showing a narrowing divergence between M2 and M1.
• Despite the rebound of TSF, authorities’ intention of gradually normalizing the previous easing monetary policy in the rest of this year to reserve a room for future uncertainties is still in place.

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