BIZCHINA / Statistics
M2 growth bounces back in October
By Zheng Lifei (China Daily)
Updated: 2006-11-14 09:01
China's money supply growth picked up its pace again in October, a
surprise rebound that some say may prompt the central bank to take
further tightening measures.
The broad M2 money supply, which includes cash in circulation and
deposits, accelerated in October to 17.1 per cent from September's 16.8
per cent, according to figures released yesterday by the People's Bank of
China.
The central bank's target for M2 growth in 2006 is 16 per cent.
The rebound came as a surprise to many as the money supply growth rate
has been on a downward spiral since July, when it grew 18.4 per cent
year-on-year.
"It is a little bit surprising to see the pace (of growth) picking up
again," said Han Meng, an economist at the Chinese Academy of Social
Sciences.
"And it shows that the central bank is fighting an uphill battle to rein
in money, credit and investment growth as the country's foreign trade
surplus is still mounting," the economist said.
The central bank has already taken a host of measures to curb money and
credit growth since April, when there were signs that the economy was
overheating.
Since then, it has twice increased the interest rate and ordered
commercial banks to raise deposit reserve ratio.
On November 3, the central bank once again raised its deposit reserve
ratio the proportion of deposits that banks must hold in the central bank.
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