2018年CRI Lowered M2 growth sign of a healthy financial development: experts

（单词翻译）

New data from China's central bank shows the M2 rate saw lower growth through the end of this past year.

Observers suggest this is part of deleveraging and the prevention of major systemic risks in the financial sector¹.

The M2, a broad measure of money supplies that covers cash in circulation and all deposits, reached over 167 trillion yuan as of the end of December, up 8.2 percent from a year earlier.

The growth rate is down 3.1 percent compared to the same period a year ago.

Ruan Jianhong is the head of Statistics and Analysis with the People's Bank of China.

"The lowered growth rate of the M2 at the end of last year reflects that deleveraging and tightened² financial supervision³ is seeing money being used in a more standardized⁴ way. Money circulation within financial institutes became less, which means decreased deposits. This is why the growth of the M2 is lower," said Ruan.

The same figures shows personal loans in China hit 19.4 trillion yuan in 2017, up 9 percent from the previous year.

Dong Ximiao is a senior researcher with Chongyang Institute for Financial Studies at Renmin University.

"The finance industry is serving the real economy in an increasingly high extent. This shows the momentum⁵ of the macro economy in China is being further consolidated," said Dong.

Ruan Jianhong adds that the monetary⁶ policy in 2017 has upgraded China's economic structure.

"The financial support is increasingly flowing toward the service and advanced manufacturing industries while industries with over capacity have received less loans. This backs up national strategies to adjust the industrial structure," said Ruan.

Growth rate of new home loans last year dropped by 14.5 percent.

Housing loans still took up over 40 percent of the total loans put out by banks last year.

Ruan Jianhong says decline is being attributed to the overall change in policies.

"In 2017, the People's Bank of China adhered to the principle that a house is for living, and not for making money. We actively⁷ guided the financial system on the regulations behind the real estate market, releasing a series of financial policies to encourage renting and strengthen home loan management. Our aim is forming a sustainable real estate market in China," added Tuan.

It's widely expected the People's Bank of China will continue to adopt a neutral monetary policy this year to keep the money supply in check, as well as support economic structural⁸ reforms.