Money growth setback over months cooling economy

The central bank’s data shows in June a decrease of new loans by 603.4 billion yuan, comparing to 927.0 billion the same period of last year. In the first half year the amount of new loans has totaled to the point of 4.63 trillion yuan, or 2.74 trillion yuan down year on year. By the end of June, the growth rate of M2 fell to 18.5 percent, the lowest level for over 17 months, nearly meeting the expected target of 17 percent by 1.5 percentage points; while M1 declined to 24.6 percent, below the set minimum for over 12 months. As per the data, it sees evident downward trend monthly to loan increase in the first half year, having kept in step with the plan of macro controlling early this year.

The new loan accounts for 61.73 percent of the annual amount by 7.5 trillion yuan, say a little bit over the original plan for 4.5 trillion yuan. In which individual mid-long term loans proportioned 1.21 trillion yuan for housing mortgage, nothing to do with the prescription of “sharp declining”.  Meanwhile non-financial firms with other sectors have been added with 2.9 trillion loans, in which comprised of mid-long term credit at 60 percent, implying the loans are to be extended for the governmental financing projects.

What should be mentioned, the short-term credit for those sectors present abnormal changes at the end of June, surprisingly added in June by 152.8 billion yuan with the fall of bill financing by 112.8 billion, for short-term credit keeps going with no large amount ever since March. So the present drop of loans has relaxed, to some certain degree, the public concern over exceeding economy, in other respect, showing the sign of hesitation in economic growth.

Up to date, it sees the serious fall of M1, from 30 percent right to 24 percent of calculated speed within just a few months, to which experts say it tells the shrink of the producers, especially from the figure of the reversed scissors gap between M2 and M1 which reads 6.1, further downwardly against that of last month.