China FX Reserves Slip to 11pc of M2 on Faster Credit Growth

China's forex coverage of M2 money supply fell to 11.01 percent at the end of March. Reserves were near 10 percent at the turn of the century, but that was also a period when capital controls were far more airtight and China was on a rapid growth trajectory. China can always break the link between reserves and the currency, but the question is what is RMB worth as an irredeemable fiat currency that can't be freely spent outside of China.

M2 growth spiked to 8.6 percent over the past 12 months, up from 8.0 percent in February. Money supply growth is below 2016 and 2017, but above 2018.

Reuters: China March new loans rebound sharply, more policy easing expected

China’s new bank loans rebounded in March, rising far more than expected, as policymakers pushed lenders to support struggling smaller companies and shore up the slowing economy.

Analysts say China needs to turn around weak credit growth to head off a sharper economic slowdown, but there are concerns that may fuel a further rise in bad loans as banks loosen lending standards.