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Money supply growth slows

By Zheng Lifei (China Daily)
Updated: 2008-11-13 10:40

Staff of China Construction Bank count the banknotes in Hai'an, Jiangsu Province. [China Daily]

China's broad money supply grew 15 percent in October, the slowest pace in three years, a sign economists said shows the economy is in sharp slowdown.

The growth of M2 - the broadest measure, which includes cash and all deposits, fell from September's 15.3 percent to 45.31 trillion yuan at the end of October, central bank figures showed yesterday.

Yuan-denominated lending rose 14.6 percent year-on-year at the end of October, up 0.1 percent from the previous month, the People's Bank of China said.

Financial institutions extended 181.9 billion yuan of new loans last month, the figures showed.

"The money data, along with a series of figures released recently, indicates the economy is experiencing a marked downturn," said Dong Xian'an, a senior economist with Southwest Securities.

The slow growth in lending, Dong said, signals that investment made by enterprises is failing to pick up.

"The data suggests more radical and massive measures are needed to reverse the slowing economy," Dong said.

The State Council announced on Sunday that it would shift from a "tightened monetary policy" to one that is "moderately loosened" as part of its efforts to prevent economic decline.

The bank has cut the interest rate three times and twice lowered the reserve requirement for banks since September.

The latest figures may prompt the central bank to cut the interest rate soon, economists said.