New RMB lending in China in the month of August this year totaled RMB 1.21 trillion, up RMB 0.15 trillion from July this year, but down RMB 66.5 billion year on year, as announced by the People’s Bank of China (PBOC) on September 12. This data was better than most analysis predicted and it signaled about speeding up of Beijing support to the local market.
M2 money supply in China in August came to RMB 193.55 trillion, up 8.2 percent year on year, 0.1 percentage points faster than that as of the end of July this year and remaining stable compared to the end of August last year.
Meanwhile, as the end of August, total social financing in China, a broad measure specific to China of credit, was at RMB 216.01 trillion, up 10.7 percent year on year, while the pace of growth was the same in July.
The current rebound in lending signals about possible recovery of major steel consuming industries, construction at first. The People’s Bank of China (PBC) announced on September 6 that it has decided to lower the required reserve ratio (RRR) for financial institutions by 0.5 percentage points on September 16, 2019. As a result, traditionally good period for steel demand in China – in September-October – together with fresh initiatives by the government may support local prices in China despite overall downtrend in the international market.