BEIJING China's new bank lending slowed more than expected in December while growth of broad money supply also eased, suggesting the central bank's efforts to tap the brakes on credit expansion to contain debt levels is gaining traction.
Chinese banks made 482.5 billion yuan ($79.9 billion) worth of new yuan loans in December, lower than a forecast of 600 billion yuan and lower than the previous month's 624.6 billion yuan, central bank data showed on Wednesday.
The broad M2 money supply rose 13.6 percent last month from a year earlier, the People's Bank of China said, missing the forecast in a Reuters poll of a 13.8 percent rise and was below a 14.2 percent rise in November.
Outstanding yuan loans rose 14.1 percent from a year earlier versus forecasts for growth of 14.3 percent.
"The slowing M2 growth in December showed central bank's tightening measures had started to bite," said Jiang Chao, economist at Haitong Securities in Shanghai.
"But the money and credit data will have limited impact on policy direction. We expect there will be no big change in central bank's monetary policy in 2014," Jiang said.
Analysts believe the central bank will maintain a neutral policy stance with fine-tuning to ensure economic growth on track while avoiding a debt-induced financial crisis.
New bank loans rose 8 percent in 2013 from the previous year to 8.89 trillion yuan, the central bank said. The rate of expansion slowed modestly from 10 percent in 2012.
The central bank also said China's total social financing aggregate, a broad measure of liquidity in the economy, was 1.23 trillion yuan in December was unchanged from 1.23 trillion yuan the month before.
For 2013, total social financing grew 9 percent from the previous year to 17.29 trillion yuan. The growth slowed sharply from 23 percent in 2012, supporting the view that the central bank has been targeting shadow financing.
Asian financial markets gave up early gains, partly due to the weaker-than-expected Chinese credit data and lingering fears that the PBOC will continue to tighten liquidity, possibly provoking more dramatic spikes in short-term interest rates which could drag on the broader economy.
Analysts also expect the Chinese authorities to rein in the sprawling shadow banking sector under their long-term deleveraging drive in a bid to put the world's second-largest economy on a more sustainable footing.
Sheng Songcheng, head of statistical department at the PBOC, told a news conference that the central bank will actively guide shadow banking activities to support the real economy while heading off potential risks.
"We will continue to implement prudent monetary policy this year and make appropriate fine-tuning and pre-emptive adjustments in policy to make monetary conditions not too tight or too loose to create a good environment for steady economic growth," he said.
China's foreign exchange reserves, the world's largest, rose $157 billion in the fourth quarter to $3.82 trillion at the end 2013.
($1 = 6.0412 Chinese yuan)
(China economics team; Editing by Eric Meijer)