Late last week, the People’s Bank of China published the latest monetary statistics for July 2012, which are dismal.
M2 money supply increased by 13.9% compared with a year ago, up from 13.64% yoy, slightly higher than estimate of 13.8% yoy. M1 money supply increased by 4.6% compared with a year ago, almost unchanged from June, but below estimate of 5.2% yoy. Currency in circulation increased by 10.0% compared to a year ago, slightly below 10.81% yoy in June. Note that, however, M2 money supply was actually down on the month.
Net new loans figures, however, were disappointing. Total net new loans amounted to RMB540.1 billion, well below the consensus estimate of RMB700 billion, and down from RMB919.8 billion in June. Breaking down the new loans figures, new loans to households were RMB184 billion, down from RMB917 billion in June. New loans to non-financial corporations were RMB358.8 billion, down from RMB644 billion in June. Of which, only RMB92 billion of new loans to non-financial corporations were in forms of medium- and long-term loans, while RMB152.6 billion of new loans came from bills financing.
Meanwhile, deposits are also falling. Total Chinese Yuan deposits fell by RMB500.6 billion compared to the end of June.
Although July is usually a weak month in terms of new loans, this decrease in new loans compared with June was more than expected. The weak numbers came in amid increasing speculation and hope that the Chinese government has and will implement further measures to stimulate its slowing economy. If all these stimulus and easing (both real and hoped) only give us such dismal numbers in July, the government and the People’s Bank of China is probably not trying hard enough.
On the whole, China has a pretty poor start for its third quarter.