Monday, June 10, 2013

China's Economic Data Misses Estimates, Will the PBOC Increase the Money Supply to Stimulate Growth?

Bloomberg TV's David Ingles broke down China's economic and credit data for May this morning. Here's a quick summary from the video (watch below).

Exports +1.0% (Est. 7.4%)
Imports -0.3% (Est. 6.6%)
Producer prices -2.9% (Est. -2.5%)
Inflation +2.1% (Est. 2.5%)
New loans +¥667B (Est. ¥815B)
Aggregate financing +¥1.19T (Est. ¥1.60T)



(Source: Bloomberg.com; Related: China Export Growth Plummets Amid Fake-Shipment Crackdown)

And here's an update on China's money supply growth, retail sales, fixed asset investment and industrial output via Reuters:

"M2 money supply rose 15.8 percent from a year earlier, slightly below a median forecast of 15.9 percent, while total social financing, a broad measure of cash in the economy, was 1.19 trillion yuan versus 1.75 trillion yuan in April.

Retail sales, fixed-asset investment and industrial output met expectations, rising 12.9 percent, 20.4 percent and 9.2 percent from a year earlier, respectively."

So will printing money fix China's growth problem, or at least prevent asset price deflation like the Fed did in the US? Here's a historical chart of China's year-over-year money supply growth since 2001.

Related: Controlling China’s Currency (Project Syndicate, May 2013)

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