China's monetary landscape showed signs of improvement in October, with M2, a broad measure of the money supply, increasing by 7.5% year-over-year to CNY309.71 trillion (USD42.84 trillion). This marks an acceleration from the previous month's growth of 6.3%. Meanwhile, M1, which includes circulating cash and certain deposits, experienced a reduced decline of 6.1% to CNY63.34 trillion (USD8.76 trillion), improving from a 7.4% drop in September.
The People's Bank of China (PBOC) and other regulatory bodies implemented several stimulus measures on September 24, including a 50 basis point cut to the reserve requirement ratio and a 20 basis point reduction in the seven-day reverse repo rate. These actions aimed to stimulate economic activity.
Experts noted that the rise in M2 reflects a shift of funds back to bank deposits from bond and wealth management products, alongside increased lending to non-banking financial institutions. Additionally, fiscal spending has accelerated, converting more fiscal deposits into corporate deposits.
Analysts predict that M1 may stabilize as the effects of recent policies take hold. The balance of yuan-denominated loans rose by 8% to CNY254.1 trillion, while social financing, a broad measure of credit and liquidity, increased by 7.8% to CNY403.25 trillion, slightly below the previous month's growth.