China’s credit expansion slows down due to the Lunar New Year's impact

China’s aggregate financing's monthly increase stood at RMB 1.71tn in February 2021 - significantly less compared to the previous month (RMB 5.17tn in January). The drop can be explained with the Lunar New Year holidays slowing down lending. February’s credit expansion scale was similar to that of December 2020. Broad M2 money supply, however, grew by 10.1% y/y in February, an acceleration compared to the 9.4% y/y increase in January.

The monthly increase in aggregate financing is an important indicator, revealing the level of support by China’s domestic financial system to the private sector. It includes financing through both the banking system as well as the capital market.

Further data and analysis on China’s economy is available on the CEIC China Economy in a Snapshot – Q1 2021 report.