The year 2018 saw China’s monetary policy carefully sail through the “reefs,” as economic slowd
own and surging exchange rate risk left little room for adjustment. However, since the be
ginning of this year, major internal and external changes have broken the dilemma.
From the internal perspective, in January 2019, the “loose credit s
upply” saw improvement in terms of both volume and structure, barriers to implem
enting monetary policy removed, which is expected to guide the Chinese economy to stabilize in the first quarter.
First of all, China’s outstanding broad money supply, or M2, grew 8.4 percent year-on-year in January, while new yuan loans and social fina
ncing both soared to historic monthly highs at 3.23 trillion yuan ($478 billion) and 4.64 trillion yu
an, respectively. The figures showed that “loose fiscal policy” has had a positive effect on credit supply to the pri
vate sector, thus pushing up the growth rate for total social financing. It is expected that in the first quarter of 2019, wi
th the gradual implementation of “loose fiscal policy,” the volume of “loose credit supply” will remain at a high level.