The growth of M1 and M2 in China should be maintained in a reasonable range
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Bank of communications Chinese (601328.SS) (3328.HK) chief economist Lian Ping pointed out that if M1 and M2 growth rate continued to fall back to the unreasonable low level, will not be conducive to the stable operation of the real economy, and may even form a new downward pressure, it is recommended that this year M2 growth target at significantly lower than the average level and higher than the end of 2017 on the lower the level of 9%-10% interval in recent years.
China Securities Journal on Wednesday quoted Lianping the article stressed that the current round of M2 growth rate down largely reflects financial deleveraging, tighter regulatory policies to promote the effectiveness of. With the continuous advance of financial leverage, financial businesses are constantly returning to their original sources. If M2 growth is still at a low level or down again, its rationality should be questioned.
"Overkill is a common phenomenon in the changes of things. When M2 is rapidly falling to achieve the goal of financial leverage, the low M2 growth rate is likely to have adverse effects on the related aspects of economic operation, which calls for high attention. The article says.
This and that, with the M2 index increase is similar, despite the rapid decline for a period of time before M1 may be related to financial deleveraging has relatively close relationship, but when the financial sector deleveraging has gradually achieved results, M1 should be gradually stabilized. If M1 growth rate continues to decline rapidly, it may indicate that business investment willingness and residents' consumption intention are weak, so it is difficult to sustain the real economy that is gradually improving.
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