China Chart of the Week: Staying the Course on Monetary Support
In several speeches earlier this week at the World Economic Forum’s summer forum in Tianjin, Premier Li Keqiang reemphasized the government’s commitment to support growth with structural reforms rather than further easing monetary policy. The Premier specifically pointed out that “As [China] is restructuring instead of expanding the money supply, current monetary policy remains sustainable.” The rate of growth in money has indeed slowed, with the latest reading in August at 12.8% yoy, down from 13.5% in July. However, money growth is still expanding at nearly 5 percentage points higher than nominal GDP, so policy remains relatively accommodative. We view this as a good indication that the government will not meaningfully increase monetary support in the face of the continued slow-down in the economy.