China Monetary Statistics for April 201211 May, 2012, 16:23. Posted by Zarathustra
The People’s Bank of China just published the preliminary data of monetary statistics of April, which continues to be poor.
M2 money supply growth was 12.8% yoy April, down from 13.4% yoy in March, again below the market expectation of 13.3%. Note that M2 money supply was actually slightly down for the month compared to the previous month. M1 money supply growth also slowed to 3.1% yoy.
The biggest disappointment, however, would be new loans figures. While the market was expecting RMB780 billion of new loans, the central bank’s figures show that new loans only amounted to only RMB681.8 billion, well below consensus.
Also, banks’ deposits are down. Chinese Yuan deposits amounted to RMB84.23 trillion at the end April, a decrease of RMB 465.6 billion. In particular, household deposit has fallen by RMB637.9 billion.
Source: People’s Bank of China
Except for inflation figures, all major macroeconomic data coming out from China for the month of April miss estimates so far. We have had mediocre trade figures of yesterday, and today we have poor industrial production, fixed asset investment and retail sales figures. Together with the poor monetary statistics now, all figures confirm the core view here that while the economy stabilised somewhat in March, the worst is not over. In fact, the stabilisation of the economy seems to have been shorter than I expected, and it is now turning for the worst sooner than I expected.
With this series of disappointments, I suspect that one can probably see some easing in the form of cutting reserve requirement ratio sooner rather than later. However, with deteriorating economy, both internally and externally, I would doubt if cutting RRR can be that useful, as I believe loans growth is going to be driven primarily through demand, and as Dong Tao of Credit Suisse has pointed out, the demand is very weak.