China's loan growth to remain strong in July

China's money and credit data are likely to have remained strong in July. M2 growth is forecast to moderate to 11.6% yoy from the surprisingly strong rate of 11.8% yoy in June, but that should have been a result of data adjustments. 

"In unadjusted terms, M2 growth probably accelerated from 10.2% to 11.2%. Total social financing is expected to register a total of CNY1.2tn for July, a very strong reading for this particular month of the year", says Societe Generale. 

Bank lending should continue to be the main area of growth. New loans are expected at CNY700bn, but considering the CNY1tn LGBs issued under the debt swap programme in July, the actual increase in bank loans was probably over CNY1.7tn. 

"That should have pushed outstanding loan growth to a 30-month high of 15% yoy", added Societe Generale.