The People's Bank of China, in supporting the central government's macro stimulus policies, has been following a moderately loose monetary policy by providing abundant credit and supplying adequate liquidity.

A release by China's central bank on July 15 shows that at the end of June, China's broadly defined money supply (M2) stood at 56.89 trillion yuan, up 28.46% from last June, 10.64% from last December, and 2.72% from May.  The narrowly defined money supply (M1) totaled 19.32 trillion yuan, up 24.79% from last June, 15.73% from last December, and 6.09% from May.  Currency in circulation (M0) summed to 3.36 trillion yuan, up 11.46%, but the same as May.

As can be seen from the chart below, even though M0 increased 11.46% from last May, the total amount of circulated currency has been relatively stable.  It is the M1 and M2 that have shown steady growth from the beginning of last year.  Ever since the international financial crisis occurred, the speed of M1 and M2 has accelerated from last summer.

Total loans stood at 37.74 trillion yuan at the end of June, up 34.44% from last June, 15.71% from last December, and 3.83% from May.  New loans originated in the first six months totaled 7.37 trillion yuan, an increase of 4.92 trillion from the first half of 2008.  Foreign currency loan stood at 295.4 billion USD, up 8.08%.  New deposit was 51.7 billion USD in the first half year, 3.6 billion USD less than last first half year.

Total deposit balance stood at 56.63 trillion yuan, up 29.02% from last June, 9.29% from last December, and 2.34% from May.  Total new deposit was 9.99 trillion yuan in the first half year, up 5.02 trillion yuan year-on-year.  Foreign currency deposit balance was 208.1 billion USD in the first half, up 16.01% year on year.  New deposit summed to 15.4 billion USD, 3.3 billion USD less year on year.

Total foreign currency reserve stood at 2.1316 trillion USD, up 17.84% year on year.  185.6 billion USD was added in the first 6 months, 95 billion USD less than first half of 2008.