Chinese bank lending increased more than expected and money supply growth accelerated in September, but the nation’s foreign reserves declined in the third quarter, data published by the People’s Bank of China showed Thursday.
Banks lent CNY 857.2 billion in September, up from CNY 702.5 billion in August. It was also larger than a CNY 750 billion lending expected by economists.
In order to counteract weak economic growth, the central bank injected CNY 500 billion liquidity into largest lenders in the nation last month.
However, Julian Evans-Pritchard, an economist at Capital Economics said the pick up in new loans does not mark a shift in policy stance but rather indicates the usual seasonal pattern in September, when loan officers boost lending ahead of quarterly performance reviews.
Aggregate financing totaled CNY 1.05 trillion compared to CNY 957.4 billion lent a month ago, the PBoC said.
The broadest measure of money supply, M2, climbed 12.9 percent at the end of September, faster than the 12.8 percent increase in August and 13 percent growth forecast by economists.
At the end of September, foreign reserves amounted to $3.89 trillion, but below forecast of $4 trillion and $3.99 trillion posted in the second quarter.
The fall in reserves does not mean that the central bank has begun to offload part of its foreign exchange reserves, Evans-Pritchard at Capital Economics, noted. Instead it simply reflects currency fluctuations which have reduced the dollar value of the portion of the reserves.
A report from the Commerce Ministry showed that foreign direct investment into China increased in September after a sharp fall in August suggesting easing concerns among investors’ about its growth prospects.
The nation attracted $9 billion investment in September, up 1.9 percent from last year. Inflows totaled around $7.2 billion in August, which was lower by 14 percent from the prior year level.
However, investment fell by 1.4 percent to $87.4 billion during January to September period.
The World Bank said early this month that economic growth in China will ease to 7.4 percent in 2014 and 7.2 percent the next year as the government seeks to put the economy on a more sustainable path with policies addressing financial vulnerabilities and structural constraints.
by RTT Staff Writer
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Chinese Sep Bank Lending, M2 Growth Exceed Expectations
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