China’s social aggregate financing, which represents society-wide funding activities, shrank for the first time in four months in February, pointing to weak investor sentiment and a relatively tight overall liquidity situation.
The figure amounted to 938.7 billion yuan (US$152.82 billion) last month, 131.8 billion yuan less than in same period last year, according to a central bank statement Monday. The February figure compares with 2.58 trillion yuan in January, and marks the first time the social aggregate financing contracted since October last year, when it fell to 864 billion yuan.
For the first two months this year, aggregate financing was 3.54 trillion yuan, down 78 billion yuan from the same period last year, according to the People’s Bank of China (PBoC).
The decrease in social aggregate financing, also called total social financing (TSF), in the first two months this year reflects a tepid investment climate in the country, especially as the capital market is in relatively tight liquidity, observers say.
Such situation is likely to continue in the coming few months as problems like a potential local debt crisis or more cases of default of corporate bonds after the Shanghai Chaori Solar Energy Science and Technology failure will keep undermining investor sentiment, they say.
Chinese banks extended 644.5 billion yuan in new renminbi loans in February, an increase of 24.5 billion yuan from a year earlier, the PBoC said. However, the figure is down from 1.32 trillion yuan in January.
M2, a broad measure of money supply, rose 13.3 percent at end-February from a year ago, slightly exceeding the official full-year target of 13 percent gain and accelerating from a 13.2 percent growth in the previous month, the central bank said.
China may roll out deposit insurance this year
China is expected to launch a deposit insurance system this year, paving the way for full interest rate liberalization, the Shanghai Securities News reported Tuesday, citing central bank governor Zhou Xiaochuan . Zhou did not provide further details. The paper cited sources as saying the system will have a compulsory insurance mechanism and insurance claims could cover more than 99 percent of savings accounts. China might also vary premiums based on each bank’s risk level as a way to curb financial institutions’ blind expansion and to promote their healthy development.
Property titans call for simpler approval structure
Several Chinese People’s Political Consultative Conference members, who are also senior executives of real estate developers, have called on the housing ministry to streamline approval procedures for property sales, saying the existing multi-tiered system is unnecessary, the China Securities Journal reported Tuesday. Xu Jiayin, chairman of Evergrande Real Estate Group Ltd. (03333.HK), also called on the authorities to look into excessive fees levied by various local administrations. Xu said his company had to pay up to 157 fees in one city to start sales. The various approval fees could constitute up to 11 percent of the total cost of a property development, Xu said.
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