Bank lending and the broad money supply accelerated in June, as the monetary easing measures announced by the government started to yield results, the People’s Bank of China (PBOC) said. The central bank will retain the “prudent monetary policy” but make it more flexible to ensure a “reasonable” credit expansion with a proper market interest rate, said Sheng Songcheng, Director of the PBOC’s Statistics Department. The year-on-year growth of the broad money supply (M2) speeded up to 11.8% in June from 10.8% in May, compared with 10.1% in April, after the PBOC lowered the amount of cash that lenders must keep as reserves. The liquidity injection at the end of June to arrest the stock market slump also boosted the growth in M2, economists said. From a credit perspective, banks’ yuan-denominated new loans came in at CNY1.27 trillion in June, higher than the market expectation, up from CNY900 billion in May, the PBOC said. During the first six months, new loans amounted to CNY6.56 trillion, up from CNY5.7 trillion during the same period last year, the China Daily reports. Lending to the real estate sector grew sharply, with outstanding loans rising to CNY19.3 trillion in June, up 19.4% year-on-year, suggesting a rebound in property investment and house sales.

The number of new Chinese venture capital funds and their funding size have dropped sharply in the first half of this year, according to a report by investment database pedata.cn, which is run by Zero2IPO Research in Beijing. A total of 105 new funds were set up in China’s venture capital market in the first six months of this year, down 16% from the same period in 2014. Among these funds, 82 publicly disclosed the amount of fresh capital geared for the domestic market. That total sum reached USD6.31 billion, down 41% from the amount made available last year. The report partly attributed that decline to the many so-called high-net worth domestic investors who increased their investments in the stock market during the short-sighted bull run in the first half of this year. Individual investors account for more than 80% of the trading turnover in China’s A-share market, which comprises about 2,800 listed companies. Zhu Bo, Founder of angel investor Guangzhou Innovalley Incubation, said there was no official statistics to show how fierce the competition for funds had become for Chinese technology start-ups, but he estimated that only about 1% of the hundreds of technology start-ups in mainland China can successfully raise seed funding from angel investors at any given time, and only 5% of those start-ups would go on to generate their first round of financing from established investors. About half of these firms would be able to reach their third round of financing. “This year will mark the winter of China’s venture capital industry. There is more money leaving the pool of funds than going in”, Zhu said. He added that his company still managed to make investments of about CNY3 million each in about 30 Chinese technology companies in the first half of this year, the South China Morning Post reports.

The growth of outbound direct (ODI) investment from China is on track to exceed last year’s record figure. Investment in the non-financial sector rose to USD56 billion in the first half, an increase of 29.2% compared with the same period last year, thanks in part to the development of new trade routes and free trade zones. The country became a net capital exporter last year as the ODI figure of USD116 billion exceeded capital inflows for the first time. China’s ODI growth is expected to reach 10% this year. ODI from China’s manufacturing sector jumped by 63.1% to USD5.09 billion between January and June. China’s outbound direct investment soared 29.2% to USD56 billion in the first half from a year earlier.

Foreign direct investment (FDI) into China’s non-financial sector is expected to increase by 4% year-on-year to USD125 billion this year. Non-financial FDI into China rose by 8% year-on-year to CNY420.52 billion in the first half. “The service industry has become the country’s main engine to attract FDI, as companies from the United States, Europe and Singapore, eager to diversify their investments, have looked to the sector, especially service outsourcing businesses,” Vice Minister of Commerce Wang Shouwen said. FDI into China’s service industry increased by 23.6% year-on-year in the first half, accounting for 63.5% of total FDI during the period. In the high-end industries, FDI growth in the telecommunications sector climbed by 231.6%, while growth in the chemicals sector increased by 71.9% and the electronic device sector by 23.6%. “Many global investors shifted their investment focus from building factories in China to acquiring local companies between January and June,” Wang said. In the past six months, 641 foreign companies carried out merger and acquisition activities in China worth a total of USD13.19 billion, up 336% compared with the same period last year. The number of foreign companies involved represents a 21.2% increase year-on-year, the China Daily reports.

China’s exports grew stronger than expected by 2.1% on a year-on-year basis to CNY1.17 trillion in June, after a 6.4% decline in April, according to the General Administration of Customs. However, imports fell by 6.7% to CNY890.67 billion in June, leading to an accelerated growth in the monthly trade surplus. During the first six months, the total value of foreign trade stood at CNY11.53 trillion, down 6.9% from a year earlier. Exports increased by 0.9% to CNY6.57 trillion while imports decreased by 15.5% to CNY4.96 trillion. The China Customs expected the foreign trade volume to show relatively steady growth in the second half of the year. Gu Xuebin, Vice President of the Chinese Academy of International Trade and Economic Cooperation, a Ministry of Commerce (MOFCOM) think tank, said though the double-digit growth era was over, exports still remain critical to the Chinese economy. “While China has lost its global advantage in low- or even medium-end products, it continues to have a comparative advantage in economies of scale in production and in the huge domestic market,” said Gu. Although labor costs have risen substantially and are higher than those in some Southeast Asian nations and other emerging markets, they still remain much cheaper than in most developed economies. Meanwhile, China has moved up the value chain. Trade with the European Union declined by 6.8% during the January-to-June period to CNY1.67 trillion, while trade with Japan fell by 10.6% to CNY832.02 billion. But China’s exports to countries along the Belt and Road such as Bangladesh, Pakistan, Israel, Saudi Arabia and Egypt increased by double-digit percentages. The United States remained China’s second-largest trading partner after the European Union during the first half of 2015. Bilateral trade totaled CNY1.64 trillion, up 4% year-on-year, accounting for 14.2% of China’s total foreign trade.