China’s new yuan-denominated lending in July declined sharply to 540.1 billion yuan (about 85.19 billion U.S.dollars), down from 919.8 billion yuan in June, the People’s Bank of China(PBOC), the central bank, announced Friday.
M2, a broad measure of the money supply that covers cash in circulation and all deposits, increased 13.9 percent year on year to 91.91 trillion yuan at the end of July, up 0.3 percentage points from the end of June but lower than the 14-percent annual target set by the government for 2012.
Preliminary data showed that social financing, a measure of funds raised by entities in the real economy, totaled 8.82 trillion yuan in the first seven months, up 514.3 billion yuan from the same period in 2011, said the PBOC.
Despite being much lower than market expectations, the deceleration in lending growth in July does not necessarily suggest a tightening of the money supply, economists said.
Peng Wensheng, chief economist with China International Capital Corporation Limited, said the sharp decline was merely a seasonal decrease following a credit expansion in June.
New yuan-denominated loans in June hit a three-month high after reaching 1.01 trillion yuan in March.