Credit growth slows in May

Chinese banks reported significantly lower than expected new loan issuance in May, indicating that monetary tightening is starting to have a significant impact, the Wall Street Journal reported. Around US$85.1 billion in new lending was doled out last month, below economists’ forecasts of US$100 billion and well below the US$114 billion figure for April. Moreover, M2, the broadest measure of money supply in China’s economy, grew only 15.1% year-on-year in May, a slower pace of growth than the 16.6% rise in April. The new figures confirm that monetary tightening and a broader economic slowdown continue as the People’s Bank of China attempts to curb inflation, which remains uncomfortably high at 5.3%. Most analysts expect the monetary tightening to continue in June.