The annual growth in China's broad measure of money supply, or
M2 that includes cash and all deposits, edged down to 16.7 percent
in May from 17.1 percent in April, the central bank said
yesterday.
The drop reflects the stable trend of the country's money supply
in recent months, although it crossed the target of 16 percent set
by the People's Bank of China (PBC) for this year.
State Information Center's senior economist Hu Shaowei said: "It
indicates that central bank measures have worked to keep the
overall money supply under control."
China's M2 growth has slowed down from a peak of 19.2 percent in
January, hovering around 17 percent this year. It was made possible
by raising required reserves eight times and interest rates four
times since April 2006.
The PBC website, however, said the narrow measure of money
supply, or M1, continued to grow strongly in May at 19.3 percent
year-on-year - the sixth consecutive month that it outgrew M2.
Analysts said the M1 growth rate, which includes cash and demand
deposits, indicates the pressure of monetary expansion that could
ultimately push up production and investment remains.
Household bank deposits continued their slide, falling from
167.4 billion yuan (US$21.9 billion) in April to 278.4 billion yuan
(US$36.4 billion) last month.
"Most of this money may have flowed into the capital market," Hu
said.
(China Daily June 13, 2007)