China to ensure ‘appropriate money growth’ after credit, economic slowdown

China’s economy decelerated more than expected in July, with the Delta variant hitting retail sales and curbs on pollution and property weighing on production

New credit expanded in July at the slowest pace since February 2020, driven by a sharp slowdown in shadow banking and government bond issuance

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New credit in China expanded in July at the slowest pace since February 2020, driven by a sharp slowdown in shadow banking, government bond issuance and tighter rules for property developers’ financing. Photo: Bloomberg

Published: 1:03pm, 24 Aug 2021Updated: 1:11pm, 24 Aug 2021

China’s central bank chief vowed to stabilise the supply of credit and boost the amount of money supporting smaller businesses and the real economy, after both credit and economic growth slowed in July.

The People’s Bank of China (PBOC) will keep monetary policy stable with a good cross-cyclical design and will support high-quality economic expansion with “appropriate money growth,” according to a statement late on Monday after a meeting with banks.

The meeting analysed monetary and credit conditions and was chaired by governor Yi Gang.

Yi reiterated the PBOC “will basically match the expansion of money supply and social financing to nominal economic growth” and enhance the structure of credit to encourage more funding to technological innovation, green development, and small businesses.

He called for efforts to push down real lending rates and financing costs for small companies.

The meeting comes after new credit expanded in July at the slowest pace since February 2020, driven by a sharp slowdown in shadow banking, government bond issuance and tighter rules for property developers’ financing.

China’s economy decelerating more than expected in the same month, with the Delta variant hitting retail sales and Beijing’s curbs on pollution and property markets weighing on industrial production.