Chinese monetary growth joins a long line of April data misses

Chinese economic data continues to underwhelm.

Fresh from missing on the industrial production, retail sales and urban fixed asset investment fronts yesterday, lending data for April has also missed expectations.

New loan growth came in at ¥707.9 billion, well down on the ¥1.18 trillion figure of March and below the median market forecast for a decline to ¥903 billion.

Broad money growth (M2) also missed to the downside, increasing by 10.1% compared to expectations for an expansion of 11.9%. Not only was this below the 11.6% level of March but also marked the slowest annual growth seen since records began in 1998.

Total social financing, the broadest measure of liquidity within the Chinese economy, also disappointed, expanding ¥1.05 trillion in April compared to an increase of ¥1.18 trillion in March.

In light of this data and other significant downside misses for manufacturing PMI, CPI and trade figures for April, it is clear that the economy is weakening, despite monetary conditions being loosened earlier in the year.

While April’s data is unlikely to capture the effect of the PBoC’s 100bps reduction to its reserve ratio requirement for banks, let alone the 25bps cut to interest rates announced earlier this week, should the May data continue to splutter, it’ll simply be a question of when, not if, further monetary stimulus will arrive.

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