After declining strongly in November and December, to I think around RMB 60-70 billion a month, new lending in January soared to RMB 804 billion.This is the highest monthly figure in years and more than twice the very high monthly average for 2007 (RMB 303 billion).It also blows out the monthly average for the first quarter of 2007 (RMB 474 billion), the former record period for new lending.To make a quick back-of-the-envelope comparison, even if February and March new lending plummets to the December level, the first quarter of 2008 will still see more new loans than the average quarter last year.I think we may see a new quarterly record set.
The sudden relaxation (to put it mildly) of new lending constraints might be a panicked but limited reaction to the effect of the storm in January, or it may signal that the government has more generally reversed course and has begun easing again.Much of the lending was short term (51%).
Money supply growth also surged in January.M2 was up 18.9%, compared to the 16.5% consensus as reported by Bloomberg.M0 was up 31.2% from last January.This is not as surprising as it seems since a lot of people took out cash for the Spring Festival holidays, and of course a lot of commentators are saying just this.Still, I am still haunted by the image of the man in the old-fashioned shower jerking the faucet back and forth as he alternatively scalds himself and freezes himself.
so do you think china will do more restrict to the financial market in the future?
By jerry - 2/14/2008 12:16 PM
the record credit number in January and surge in M2 put the whole cry for easing into perspective: what should China do facing stagflationary pressure ?
1. Showering real economy with credit bing wont do too much good, it will create massive credit problem 12 months down the road. NPL ratio already jump by 20bp in 4Q when economy only marginally slowed.
2. With inflation so high, Easing interest rate or stop exchange rate appreciation is almost unthinkable economically, politically.
There is confusion, dillemma, contradiction in China macro conditions, doing nothing or doing too much are all dangerous, the room for policies errors are massive
I feel they should resist call for easing tight monetary policy, cap inflation first with fast Rmb appreciation and limited rate hike
Focus should be on fiscal policy to ease supply bottleneck, and cut tax for households, energy-food and industrial producers
By isaac - 2/14/2008 12:32 PM
Hallo
"The sudden relaxation (to put it mildly) of new lending constraints ... or it may signal that the government has more generally reversed course and has begun easing again. .."
Because? Because the Chineses fear the slowdown of their economy as an effect of US-recession? The Chinese are focused on growth.
According UBS (WMR), the CPI numbers give signal for slowdown: 2006: 1.5%; 07: 4.4%; 08f: 4.2%; 09f: 3.8%
So we have: - DB, UBS, globumedes (and maybe the Chines gov. too) have the opinion, that the inflation will come down. (and maybe the Chines gov. too) - Tammy, CS, M. Pettis: they see the contrary.
globumedes
By globumedes - 2/14/2008 11:48 PM
Sounds right, Globumedes, except for the Chinese government. There is no "Chinese government" view on inflation. Generally speaking it seems that some people, mainly in the PBoC, SAFE, and parts of the MoF are very worried about persisiting inflation. Others, mainly provincial and municipal leaders, the MoC, and the State Council believe it is a temporary food problem. Premier Wen seemed to support the latter until summer of last year, then switched to the former, and now seems to be switching back to the latter.
I think inflation in January and February are going to be very high, but the inflation doves are going to use the storms and the Spring Festival to explain them away. It won't be until the March numbers come out, in Mid-April, that will tell us whether we should be worried or not.
By Michael Pettis - 2/15/2008 2:41 AM
If there is any, what is the extent and trend of ownership of hard assets, or of securities that reflect such ownership in China - in general?
Michael Pettis is a professor at Peking University's Guanghua School of Management, where he specializes in Chinese financial markets. He has also taught, from 2002 to 2004, at Tsinghua University’s School of Economics and Management and, from 1992 to 2001, at Columbia University’s Graduate School of Business. He is a member of the board of directors of ABC-CA Fund Management Co., a Sino-French joint venture based in Shanghai.
Pettis has worked on Wall Street in trading, capital markets, and corporate finance since 1987, when he joined the Sovereign Debt trading team at Manufacturers Hanover (now JP Morgan). Most recently, from 1996 to 2001, Pettis worked at Bear Stearns, where he was Managing Director-Principal heading the Latin American Capital Markets and the Liability Management groups. He has also worked as a partner in a merchant banking boutique that specialized in securitizing Latin American assets and at Credit Suisse First Boston, where he headed the emerging markets trading team. Besides trading and capital markets, Pettis has been involved in sovereign advisory work, including for the Mexican government on the privatization of its banking system, the Republic of Macedonia on the restructuring of its international bank debt, and the South Korean Ministry of Finance on the restructuring of the country’s commercial bank debt.
Pettis is a member of the Institute of Latin American Studies Advisory Board at Columbia University as well as the Dean’s Advisory Board at the School of Public and International Affairs. He is the author of several books, including The Volatility Machine: Emerging Economies and the Threat of Financial Collapse (Oxford University Press, 2001). He received an MBA in Finance in 1984 and an MIA in Development Economics in 1981, both from Columbia University.
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Comments (5) for "January new lending and new ...
December, 2007
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