REVIEW OF FINANCIAL PERFORMANCE IN JANUARY 2004

Growth in money supply slowed. According to preliminary statistics, the balance of M2 went up by 18.1 per cent year-on-year to 22.51 trillion yuan at end-January, an increase 1.2 percentage points lower than the same period of last year. And its month-on-month growth converts to a low annual growth rate of 14 per cent. The balance of M1 stood at 8.38 trillion yuan, up 15.7 per cent year-on-year and 3.8 percentage points weaker than the previous year.

Cash put into circulation before the Spring Festival hit a record high, with money in circulation M0 exceeding two trillion yuan for the first time. Cash put into circulation from the year's beginning to the Spring Festival amounted to 531.4 billion yuan, 62.2 billion yuan more than that of the previous year and also a record high of cash cast into circulation for the Spring Festival. After the Festival, large amount of money was withdrawn from circulation. In January, the net amount for money put into circulation was 254.1 billion yuan. At the end of January, M0 recorded a balance of 2.23 trillion yuan, a rise of 4.9 per cent from the previous year.

Corporate deposits dropped greatly due to extending salary and bonus before the Spring Festival. Deposits of all financial institutions (including foreign-funded institutions) denominated in both local and foreign currencies stood at 22.28 trillion yuan at end-January, increasing by 246.4 billion yuan or 19.9 per cent in this month, and 3.1 billion yuan or 0.1 percentage point lower than the previous year. Among the total deposits, RMB deposits went up by 21.2 per cent to 21.03 trillion yuan by January's end. At the end of January, the balance of corporate deposits denominated in both local and foreign currencies was 7.46 trillion yuan, up 18.8 per cent year on year - an increase 0.5 percentage points higher than the previous year. The newly added corporate deposits this month fell by 270.5 billion yuan, a drop 129.6 billion yuan more than the previous year.

Household savings deposits advanced rapidly. At end-January, household savings deposits of all financial institutions (including foreign-funded ones) denominated in both local and foreign currencies continued its rapid growth to reach11.63 trillion yuan, accelerating by 18.6 per cent year-on-year.

Growth of loans provided by financial institutions dropped by 0.8 percentage point as compared with the end of last year, illustrating the effects of monetary policy. At the end of January, loans extended by all financial institutions (including foreign- funded ones) denominated in both local and foreign currencies together stood at 17.17 trillion yuan. Loan year-on-year increases reached 20.6 per cent, 2.2 percentage point higher than the previous year, but down 0.8 percentage point from the end of the previous year. Loan growth has been dropping continuously for five months straight.

At the end of January, the RMB exchange rate remained stable at 8.2770 against USD. RMB trading in the interbank market was active and market rates climbed up.