Last month's hastened growth of money supply and the accelerated
growth of bank loans have triggered concerns that further
tightening measures could be put in place to rein in inflation and
asset price rises.
The People's Bank of China said yesterday the broad measure of
money supply, or M2, increased by 18.5 percent in October, slightly
more than in September. M2 includes cash and all deposits, and is
an indicator of the overall amount of money in the market.
M1, or the narrow measure of money supply, which includes cash
and demand deposits, increased by 22.2 percent in October
year-on-year, a 0.14-percentage point increase over September.
"The indices show that liquidity remains ample in the market,"
senior economist with the State Information Center Hu Shaowei told
China Daily.
Household bank deposits fell to 506.2 billion yuan in October,
the central bank said, citing demand for new initial public
offerings.
New yuan loans in October were 136.1 billion yuan, compared with
283.5 billion yuan in September and 302.9 billion yuan in
August.
Banks extended 3.50 trillion yuan in new loans during the
January-October period, compared with 3.36 trillion yuan in the
first nine months.
Although the monthly increase in loans dropped, credit remains
at a high level, which will contribute to the investment boom, Hu
said.
Li Zhikun, analyst with the Beijing-based China Jianyin
Investment Securities, said that before, bank loans had stoked the
fires of investment, but this year, it seems much of the money has
gone to the capital or real estate markets, which increased assets
prices.
Given the expected high consumer price index for October and the
released money supply figures, an interest rate hike could be
imminent, he told China Daily.
(China Daily November 13, 2007)
