M2 growth in Dec slows down

China's broad measure of money supply (M2) grew 13.8 percent in December from a year earlier, slower than its target of a 14 percent rise in 2012, central bank data showed Thursday.

The growth rate of M2 in December was 0.1 percentage points lower than in November, but still 0.2 percentage points higher than the same period of the previous year, the People's Bank of China, the central bank, said on its website.

"The slightly slower growth of M2 may have helped keep the country's inflation last year down to a reasonable level," Zhuang Jian, a senior economist at Asian Development Bank in China, told the Global Times Thursday.

The M2, which is a major indicator of inflation, is the amount of money in a country's economy, or the actual amount of bank bills and coins in circulation plus money in checking and savings accounts.

Although the growth of M2 was slowing down, the country's total social financing aggregate, which is a measure of liquidity in the economy, has witnessed fast growth, standing at 1.63 trillion yuan ($261.6 billion) in December, up from 1.14 trillion yuan in November, according to the central bank.

Analysts said the data indicated that China's macro-economy has entered a stable upward development trend.

"Judging from the total volume of social financing, the overall liquidity at present is relatively eased and the aggregate demand shows that the country's economy has begun to recover slightly from a bottom in the third quarter of last year," Zhuang said.

China's Purchasing Managers' Index (PMI) for the manufacturing sector stood at 50.6 percent in December, its third consecutive month above 50 percent, as it rose to 50.6 percent in November from 50.2 percent in October, the China Federation of Logistics and Purchasing said on January 1.

"The total social financing aggregate in December could support mild recovery of the country's economy in the first half of this year," Lu Zhengwei, chief economist of Fuzhou-based Industrial Bank, told the Global Times Thursday.

Bank loans accounted for 52.1 percent of the total social financing aggregate last year, 6.1 percentage points lower than the previous year, the central bank said.

Enterprises gained more money in diverse ways including trust and bond markets, which Zhuang said is "what the government would like to see."

Financing from enterprises, bonds and trust loans amounted to 14.3 percent and 8.2 percent, respectively, of total social financing, the central bank said.

But Lu of Industrial Bank warned that the authority should be cautious about the fast growth of non-credit financing to avoid some financial risks.