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BEIJING, April 15 China's money supply grew at
the weakest pace in more than a decade in March, another sign of
softening economic momentum, with analysts saying a fall in the
yuan looked to have slowed capital inflows and the build-up of
foreign exchange reserves.
Broad M2 money supply grew 12.1 percent last month from a
year earlier, below a forecast of 13 percent in a Reuters poll.
The growth rate was the slowest since May 2001, according to
National Bureau of Statistics data.
"This is the first time that the M2 growth moderated to
below the announced target of 13 percent since April 2012,
indicating that the deleveraging process in the financial
institutions continues," said Zhou Hao, economist at ANZ in
Chinese banks made 1.05 trillion yuan ($168.8 billion) of
new yuan loans in March, recovering from a dip to 644.5 billion
in February caused by the Chinese New Year holidays.
However, the growth in total outstanding loans slowed to an
eight-year low of 13.9 percent, Thomson Reuters data showed.
"The slowing capital inflows and decelerated growth of
foreign reserves are likely to be the main reasons of the
slowing growth of M2," said Li Huiyong, an economist at Shenyin
& Wanguo Securities in Shanghai.
The yuan fell some 2.7 percent against the dollar in the
first quarter, nearly erasing all of its gains last year.
Traders and analysts said the sharp fall was engineered by
the central bank as a way of introducing risk and curbing
speculation on what had been seen as a one-way bet.
RESERVE GROWTH SLOWS
Total social financing (TSF), a broad measure of liquidity,
jumped to 2.07 trillion yuan, more than double February's 938.7
billion yuan. Similar jumps occurred after the Chinese New Year
holidays in 2012 and 2013, central bank data showed.
But the March TSF was almost 19 percent lower than a year
earlier, and for the quarter it was down an annual 9 percent.
China's foreign exchange reserves, the world's largest, rose
to $3.95 trillion at the end of March from $3.82 trillion at the
end of 2013, with their quarterly rate of growth slowing.
There has been an almost unabated run of soft data out of
China this year. Figures on Wednesday are forecast to show the
world's second-largest economy grew an annual 7.3 percent in the
first quarter, the weakest in five years, a Reuters poll found.
"In general, we think the government will keep monetary
policy relatively loose due to weak economic situation in the
first half of this year," said Li, of Shenyin & Wanguo
($1 = 6.2191 Chinese Yuan)
(Reporting by Adam Rose, Kevin Yao and Xiaoyi Shao; Editing by