Chinese Money Supply has been observed to grow at the slowest pace since 2001, as disclosed in the official figures yesterday. This is the reason the analysts set up to announce a moderate GDP growth today.
M2, which measures the quantity of money in the economy, grew only by 12.% this year till March. The same growth was around 14 to 15% on average last year.
Government statistics also indicated last month that Chinese banks lent out around 1.05 trillion yuan (£96.03 billion), which is a significant increment on February’s figures.
Nevertheless, Qinwei Wang at Capital Economics, stated that it was a common seasonal practice and does not indicate a change in the policy stance. In reality, the credit deceleration is still on track, lead by growth in outstanding loans and decrease in the overall credit.
Consensus estimate proposes that the GDP growth rate of China might have slowed down to almost 7.3% in Q1.