Chinese net new lending slowed in March

LONDON (ShareCast) - China's money supply slowed in March in what markets may take as further evidence of a quicker than expected slowdown in economic activity. Money supply as measured by the so-called M2 monetary aggregate slipped to a 11.6% year-on-year pace in March, down from a 12.5% clip in the month before.

Economists had been expecting a reading of 12.4%.

That comes amid multiple recent economic reports which have undershot analysts' expectations.

Net new bank lending accelerated to 1.18trn Yuan in March from 1.02trn in the prior month.

That was considerably better than the 1.04 trn Yuan expected by analysts.

However, in terms of year-on-year rates of change growth fell back to 14% in March, from 14.3% in the month before.

To take note of, March tends to be a seasonally strong month.

"Given that, we shouldn't expect much of a boost for the economy," analysts at Capital Economics wrote on Tuesday.

In parallel, according to data released by Beijing on Tuesday the country's foreign exchange reserves stood at 3.73trn Yuan at the end of March.

That marks a decline of 90bn Yuan since the turn of the year.

According to the same think-tank the US greenback's strength reduced the value in dollars of China's reserves by $130bn.

Hence, the country's central bank did not sell reserves in the first quarter, Capital Economics cautioned, rather the opposite, albeit on a much reduced scale. A few economists have speculated the strengthening Yuan might be a factor behind the recent run of weak data, so some observers might be tempted to conclude that Beijing has been attempting to weaken its currency through interventions, which could show up as a decline in the amount of international reserves held by the central bank.