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China's credit growth beats projections after monetary easing
[BEIJING] China's broadest measure of new credit increased more than economists estimated in June, signaling recovering demand after the central bank's monetary easing and government efforts to boost provincial finances.
Aggregate financing, which includes bank loans and off- balance credit, was 1.86 trillion yuan (S$410 billion), according to the People's Bank of China on Tuesday. That compares with the median estimate of 1.4 trillion yuan in a Bloomberg survey of economists.
The pick up comes after the government relaxed rules for local authorities to obtain financing for infrastructure projects. The PBOC cut benchmark interest rates to record lows last month in the fourth reduction since November.
"Following the outright easing during the past half of year and given the already abundant short-term liquidity, we believe monetary easing may evolve into a new stage, focusing more on improving monetary transmission channels and directing more funding to the real economy," economists at UBS Group AG wrote in a note before the data release.
M2 money supply rose 11.8 per cent from a year earlier in June, the central bank data showed.
China's foreign-exchange reserves, also released Tuesday, showed a decline to US$3.69 trillion as at June 30.
Gross domestic product data for the second quarter due Wednesday is forecast by analysts to show the economy expanded 6.8 per cent from a year earlier. Hanging over the outlook is the fall out from a stock market rout that at one stage had wiped almost US$4 trillion off equity valuations.