THE M3: CHINA

The Macau Metro Monitor, July 6, 2011

CHINA RAISES INTEREST RATES WSJ

The People's Bank of China said it will raise its benchmark deposit and lending rates by 0.25% point to 6.56% and 3.5% respectively.  This is the third rate increase this year and its fifth rate increase in the latest round of tightening.  The move comes after the PBOC announced increases in its benchmark lending and deposit rates on April 5 and February 8 this year.  The PBOC also raised banks' reserve requirement ratio six times in 2010 and six times so far in 2011.

NEW LOANS IN CHINA THIS YEAR MAY BE ONLY CNY 6.67T China Securities Journal

According to a preliminary estimate, new loans in China for June reached CNY500 Billion, which implies CNY4 Trillion loans for the 1st half of 2011.  Using a 3:3:2:2 ratio for quarterly lending,  this would imply CNY6.67 Trillion for 2011, below the widely reported but never officially announced target of CNY 7-7.5 Trillion.