China’s Money Supply Grows as Loans Fall

“China’s new yuan loans unexpectedly fell in October from a year earlier and money supply rose less than forecast, damping signs the world’s second-biggest economy is recovering after a seven-quarter slowdown.

Banks extended 505.2 billion yuan ($81.1 billion) of local- currency loans, down 14 percent from a year earlier, data from the Beijing-based People’s Bank of China showed today. The median estimate was 590 billion yuan in a Bloomberg News survey. M2, the broadest measure of money supply, increased 14.1 percent, compared with a median forecast of 14.5 percent.

Today’s reports show weaker-than-forecast credit expansion may limit a rebound in economic growth as the ruling Communist Party holds a congress in Beijing to anoint new leaders. Central bank Governor Zhou Xiaochuan said yesterday the nation is still dealing with the effects of five years of financial crisis abroad, adding to official cautions on the outlook even after gains in exports and industrial output.”

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