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Money Supply and New Loans Slow down in August
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China's M2 rose 17.94 percent in August, slightly lower than July's 18.4 percent and the lowest monthly figure of the year, China Securities Journal reported on Wednesday.

M2 is the broad measure of money supply that covers cash in circulation and all deposits.

The paper said that new loans in August were 189.5 billion yuan (US$23.7 billion), up 16.13 percent on the same period last year.

The August new loan figure is higher than July's 171.8 billion yuan but much lower than June's 394.7 billion yuan, indicating that red-hot loan growth has been checked.

Growth in M1, the narrow money supply gauge covering cash in circulation and corporate demand deposits, rose 15.57 percent from a year earlier. It rose 15.3 percent in July.

Analysts say the August figures suggest that tight monetary policies are still very much the order of the day.

The disparity in M1 and M2 growth has dropped month by month from 8.6 percentage points in January to 2.37 percentage points in August, indicating an increase in current deposit savings leading to faster currency circulation and rising asset prices.

Analysts suggested raising interest rates on long-and medium-term deposit savings.

(Xinhua News Agency September 14, 2006)

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