China has recorded slightly faster growth for its benchmark money supply (M1) in July, but economists say the impact of credit relaxation hinted at by Beijing recently will not be seen immediately.
M1 money supply - cash in circulation and demand deposits - had expanded by 15.2 per cent in July as compared with the average 15 per cent growth for the first half of this year, the Economic Information Daily reported yesterday.
Broad money supply M2 - cash in circulation plus all deposits - had increased 27 per cent in July, compared with an average growth of 28.2 per cent in the first six months this year.
Cash in circulation (M0) has grown by 10.1 per cent to 780.9 billion yuan (about HK$726.47 billion) in July, according to the paper.
Hong Kong-based economists said the downward trend of M2, widely regarded as a more significant indicator, would continue for a period despite signs, such as interest rate cuts, of an easing in credit control. It was unlikely the average M2 growth this year would drop to the government target of 25 per cent, economists said.
Schroders economist Tao Dong said there would be a lagging period of several months before the impact of the credit relaxation could be seen.
