-Diana Mousina, an economist at Commonwealth Bank of Australia
China's financial institutions issued 1.47 trillion yuan worth of new loans last month, the highest level in more than five years and compared with 697.3 billion yuan in December, according to the People's Republic of China. Total social financing, a broader measurement of credit in the Chinese economy, stood at 2.05 trillion yuan in January, up from 1.69 trillion yuan in December. The central bank also said that M2 money supply advanced 10.8% from the previous year, the slowest pace since 1998. Bank lending as well as changes in money supply are important parts of Beijing's monetary policy. The government tells commercial banks how much to lend and when to lend each year.
The recent data suggested a further loss of momentum at the beginning of the year and building threats to the financial system. January imports slumped nearly 20%, while consumer inflation hit a the lowest level in five years, reinforcing expectations that policy makers will have to step up more stimulus measures to avert a "hard landing". China's economic output rose at the slowest pace in 24 years in 2014 and recent data suggested a further slowdown at the start of 2015. However, economic indicators may be a subject for a revision given the considerable seasonal distortions prompted by the timing of the Lunar New Year holidays.
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