By Wang Zhi

Figures released by The PBC showed that China's finance operated steadily in 2005; aggregate of money supply and credit increased at a rate appropriate for the general requirements of macro-control.

By the end of 2005, the balance of money and quasi-money M2 reached RMB 29.9 trillion, up 17.6 percent year-on-year with its growth rate 2.9 points higher compared with the previous year. The balance of money M1 reached RMB 10.7 trillion, up 11.8 percent year-on-year with its growth rate 1.8 points lower compared with the previous year. The balance of currency in circulation M0 reached RMB 2.4 trillion, up 11.9 percent year-on-year.
 
According to the report, money supply in 2005 appeared low growth rate in the first half of the year and high growth rate in the second half. The growth rate of money and quasi-money M2 reached the lowest level of the year of 14 percent in March, and then rose steadily, achieving 18.3 percent in November, the highest level of the year. The trend of money M1 went basically in accord with M2; however the growth of M2 was continually faster than that of M1 thanks to the exacerbated disequilibrium of balance of payments, the rapid growth of the RMB counterpart of foreign exchange reserves, and the large amount of enterprise and household deposits resulted from exchange settlement.

By the end of 2005, the total domestic and foreign currency credits of financial institutions reached RMB 20.7 trillion, increasing 12.8 percent year-on-year. The balance of RMB credits increased at an average rate of 13 percent per month in 2005, maintaining steady growing momentum.

As far as the loan orientations were concerned, the loan structure was further improved, and the proportion of working capital loans increased considerably. In 2005, the RMB short-term loans and notes financing as enterprises working capital increased RMB 1.12 trillion, 269.4 billion Yuan more compared with the increment of previous year. The growth of notes financing played an active role in alleviating financing difficulties for SMEs.

The over-rapid growth of mid-and-long term loans was under control. In 2005, the growth rate of RMB mid-and-long term loans was 17.2 percent, 7.0 points lower compared with the previous year.

The growth rate of individual consumption loans became smoothed. By the end of 2005, the balance of individual consumption loans was RMB 2.2 trillion, up 10.4 percent year-on-year with its growth rate 16 points lower compared with the previous year. The total balance increased RMB 199.6 billion compared with early 2005 and year-on-year increment reduced RMB 233.1 billion, among which individual housing loans increased RMB 244.4 billion compared with early 2005 and year-on-year increment reduced RMB 162.9 billion; automobile loans decreased RMB 50 billion compared with early 2005 and year-on-year increment reduced RMB 24.8 billion.

The PBC believed that the smoothing of the growth rate of individual consumption loans, especially individual housing loans, was not only the normal adjustment after many years of high-speed growth, but also reflected the working of the macro-control measures on the real estate industry. However, regarding the important role played by consumption demands in our national economy, we should give our concern to its further changing trend.

By the end of 2005, the total domestic and foreign currency deposits of financial institutions (including foreign capital financial institutions) achieved RMB 30 trillion, up 18.2 percent year-on-year. The total balance increased RMB 4.4 trillion compared with early 2005 and year-on-year increment increased RMB 1 trillion, among which the balance of RMB deposits reached RMB 28.7 trillion, up 19 percent year-on-year, increasing RMB 4.4 trillion compared with early 2005 and year-on-year increment increased RMB 1.1 trillion; the balance of foreign exchange deposits reached USD 161.6 billion, up 5.6 percent year-on-year, increasing USD 6.8 billion and year-on-year increment reduced USD 2.92 billion.

The preference of enterprise and household on term deposits became strengthened. By the end of 2005, the balance of RMB enterprise deposits achieved 9.6 trillion, up 13.6 percent year-on-year, among which term deposits increased RMB 770.6 billion compared with early 2005 and year-on-year increment increased RMB 305.2 billion; the balance of RMB household deposits achieved 14.1 trillion, up 18 percent year-on-year, among which term deposits increased RMB 1.4 trillion compared with early 2005 and year-on-year increment increased RMB 448.7 billion; the balance of fiscal deposits achieved RMB 799 billion, up 28.1 percent year-on-year, increasing RMB 175.2 billion compared with early 2005 and year-on-year increment increased RMB 118.8 billion.

According to the preliminary evaluation of PBC, in 2005 the balance of payments continued "double surpluses". Surplus of current account became the major source of balance of payments surplus, while capital and financial account surplus decreased.

By the end of September 2005, the balance of foreign debts reached USD 267.5 billion, increasing 8 percent compared with the end of the previous year with its growth rate reducing 7 points year-on-year, among which the balance of mid-and-long term foreign debts achieved USD 123.5 billion, decreasing USD 800 million compared with the end of the previous year; the balance of short-term foreign debts achieved USD 144 billion, increasing USD 20.8 billion compared with the end of the previous year.

Although the foreign exchange reserves maintained relatively rapid growth, its growth rate had decreased somewhat. By the end of 2005, China's foreign exchange reserves reached USD 818.9 billion, increasing USD 208.9 billion by 34.3 percent compared with the end of the previous year with its growth rate reducing 17 points year-on-year. The foreign exchange reserves increased USD 49.2 billion, 51.9 billion, 58 billion and 49.9 billion respectively in the four quarters of 2005.