China’s Slowing Growth in M2 Hasn’t Affected Economy, Ma Says

China’s slowing growth in money supply hasn’t affected the economy and the nation’s fundamentals support a stable foreign-exchange rate, the top economist at the central bank’s research bureau said.

The country’s stabilizing hoard of foreign reserves, which were little changed at $3.201 trillion in July from the previous month, signal the exchange rate is near equilibrium, Ma Jun, chief economist of the People’s Bank of China’s research bureau, wrote in a note Saturday. He added China’s corporate debt was high by international standards and that it should reduce the leverage by cleaning up “zombie” companies and implementing debt-to-equity swaps.

Ma’s remarks came after official data on Friday indicated that a recent economic stabilization faltered in July, with factory output, retail sales and investment all missing estimates, and the broadest measure of new credit rising at the slowest pace in two years. He pointed to the International Monetary Fund’s forecasts for China’s growth as a sign of confidence in the world’s second-largest economy.