Aggregate financing picks up in August

Aggregate financing hit 1.57 trillion yuan ($256.6 billion) in August, representing a gain of 321.2 billion yuan over the same month last year, the People's Bank of China (PBOC) announced Tuesday.

August's total compares with the record high of 2.54 trillion yuan set in March and July's 808.8 billion yuan.

Aggregate financing is a measurement adopted by the PBC in 2011 to assess funds raised by participants in the real economy. Components of this measurement include foreign currency bank loans, trust loans, corporate bonds, renminbi bank loans, entrusted loans, undiscounted bankers' acceptance bills and domestic equity financing.

New yuan loans in August equaled 711.3 billion yuan, up 7.4 billion yuan over the same month last year. Entrusted loans and undiscounted bankers' acceptance bills increased to 293.8 billion yuan and 304.5 billion yuan respectively.

Corporate bond financing equaled 122.7 billion yuan for August, slumping 135.2 billion yuan year-on-year. Domestic equity financing and foreign currency bank loans dipped to 13.6 billion yuan and $5.8 billion respectively.

New renminbi-denominated bank loans only accounted for 45.3 percent of August's aggregate financing, the lowest proportion in 10 years, according to a Reuters report.

This compares with 86.5 percent in July, indicating that off-balance-sheet lending accounted for a larger share of August's growth in credit.

"This data shows that credit growth is picking up. And the increase in off-balance-sheet lending indicates that leverage rates among Chinese companies are rising," Ma Wenfeng, a macro analyst with Beijing Orient Agribusiness Consultant Ltd, said in an interview.

Ma explained to the Global Times that liquidity conditions also played a factor in the credit expansion.

"These figures, together with other economic data released earlier this month, suggest that economic growth is accelerating," said Ma.

PBC statistics also showed China's broad money supply (M2). which covers cash in circulation and all deposits, rising in August to 106.12 trillion yuan, an increase of 14.7 percent over the same period last year. Meanwhile, the narrow measure of money supply (M1) jumped 9.9 percent year-on-year to 31.41 trillion yuan.

In an interview with Reuters, Wang Yang, an analyst at China Securities Co Ltd, was cited as saying that money supply grew faster than expected, which may have stemmed from an increase in foreign exchange purchases among Chinese banks.

Ma agreed with Wang, but speculated that the central bank would maintain its current monetary stance, contrary to the views of some analysts.