China's money-supply expansion unexpectedly accelerated, adding pressure on the central bank to prevent cash fueling inflation already close to the fastest pace since 1996.
M2, the broadest measure, rose 16.9 percent at the end of April from a year earlier to 42.9 trillion yuan ($6.1 trillion), the People's Bank of China said today on its Web site, after gaining 16.3 percent in March. That topped the 16.2 percent median estimate of 22 economists surveyed by Bloomberg News.
The trade surplus, foreign direct investment and inflows of capital from investors betting on currency gains are flooding the world's fastest-growing major economy with cash. The central bank yesterday ordered lenders to set aside a record 16.5 percent of deposits as reserves, a 0.5 percentage point increase, after inflation rebounded to 8.5 percent in April.
"Liquidity is still pretty strong,'' said Sun Mingchun, an economist at Lehman Brothers Holdings Inc. in Hong Kong. "The government will likely raise the reserve requirement three more times this year to 18 percent -- or even more if the trade surplus continues to be large.''
The trade surplus pumped $58 billion into the banking system in the first four months and foreign direct investment injected $35 billion.
The People's Bank of China has relied this year on reserve requirements, price controls, bill sales and the 4.4 percent gain by the yuan against the U.S. dollar to cool inflation. Interest rates have stayed unchanged.
Lending Growth
Outstanding local-currency loans rose 14.7 percent at the end of April from a year earlier, the central bank said. Lenders extended 463.9 billion yuan of new loans last month, bringing the total to 1.8 trillion yuan for the first four months.
February's 8.7 percent inflation rate was the fastest since May 1996.
Outstanding local-currency deposits rose 17.7 percent at the end of April from a year earlier, the central bank said. Household savings rose 99.2 billion yuan from the previous month.
China's economy, the world's fourth largest, expanded 10.6 percent in the first quarter from a year earlier, down from 11.9 percent for all of 2007, as exports cooled.
M2, the broadest measure, rose 16.9 percent at the end of April from a year earlier to 42.9 trillion yuan ($6.1 trillion), the People's Bank of China said today on its Web site, after gaining 16.3 percent in March. That topped the 16.2 percent median estimate of 22 economists surveyed by Bloomberg News.
The trade surplus, foreign direct investment and inflows of capital from investors betting on currency gains are flooding the world's fastest-growing major economy with cash. The central bank yesterday ordered lenders to set aside a record 16.5 percent of deposits as reserves, a 0.5 percentage point increase, after inflation rebounded to 8.5 percent in April.
"Liquidity is still pretty strong,'' said Sun Mingchun, an economist at Lehman Brothers Holdings Inc. in Hong Kong. "The government will likely raise the reserve requirement three more times this year to 18 percent -- or even more if the trade surplus continues to be large.''
The trade surplus pumped $58 billion into the banking system in the first four months and foreign direct investment injected $35 billion.
The People's Bank of China has relied this year on reserve requirements, price controls, bill sales and the 4.4 percent gain by the yuan against the U.S. dollar to cool inflation. Interest rates have stayed unchanged.
Lending Growth
Outstanding local-currency loans rose 14.7 percent at the end of April from a year earlier, the central bank said. Lenders extended 463.9 billion yuan of new loans last month, bringing the total to 1.8 trillion yuan for the first four months.
February's 8.7 percent inflation rate was the fastest since May 1996.
Outstanding local-currency deposits rose 17.7 percent at the end of April from a year earlier, the central bank said. Household savings rose 99.2 billion yuan from the previous month.
China's economy, the world's fourth largest, expanded 10.6 percent in the first quarter from a year earlier, down from 11.9 percent for all of 2007, as exports cooled.
Posts
No comments:
Post a Comment