A 15.8% rise in the M2 money supply in May and aggregate financing of over 1T yuan shows there...

|By:, SA News Editor

A 15.8% rise in the M2 money supply in May and aggregate financing of over 1T yuan shows there is plenty of liquidity in China, state-controlled Xinhua news agency says in a commentary piece. Last week's credit crunch in the banking sector was therefore due to widespread speculative trading and shadow financing. The article confirms suspicions that the central bank, which let short-term lending rates hit record highs before intervening to ease the problem, wanted to send a warning as it looks to slow down the credit boom.