(Bloomberg) -- China’s credit growth moderated in December, suggesting that a massive increase in credit since last year may have peaked as the central bank seeks to normalize policy.

• Aggregate financing was 1.72 trillion yuan ($266 billion), the People’s Bank of China said Tuesday. That compares to 2.13 trillion yuan in November and 2.1 trillion yuan in December 2019. The median estimate of economists was 2.19 trillion yuan
• Financial institutions offered 1.26 trillion yuan of new loans in the month, versus a projected 1.25 trillion yuan

Key Insights

• Broad M2 money supply grew 10.1% from a year earlier.
• The stock of outstanding credit was 284.8 trillion yuan in December, 13.3% larger than a year ago. That was slower growth than in November.
• The stock of outstanding yuan loans rose to 171.6 trillion yuan.
• As the economic recovery takes hold, China’s central bank has started to explore the possibility of exiting some emergency stimulus measures rolled out during the pandemic, while maintaining necessary support in certain areas.
• In an interview with state-run Xinhua News Agency Friday, central bank Governor Yi Gang said monetary policy in 2021 should be stable, adding that liquidity should be kept reasonable and ample, and the growth rates of M2 money supply and aggregate social financing should match that of nominal gross domestic product. He also indicated there’d be some tightening in credit supply, noting the need to prevent financial risks and stabilize the macro leverage ratio.
• “Credit growth might have already peaked last November,” Macquarie Group Ltd. economists led by Larry Hu wrote before the data was released. “The broad direction toward tightening is clear.”

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