M2 Growth Remains in Downtrend
Chinese M2 grew 11.3 percent yoy in January, but that required a 1.7 percent mtm increase in M2. Every January typically sees spikes in M2, and this year is no different. However, the 3-month growth rate in M2 is only 15.5 percent, below the 17 percent growth seen in January 2016.
If you are bearish on the reflation trade, there the rise and fall in Chinese M1:
Total social financing was up from a year ago, but the rate of increase here is slowing too.
The spike in M2, along with declining reserves, deteriorated the FX reserve coverage of M2 money supply.