Intensify financial support

China's social financing scale has surpassed 400 trillion yuan, broad money (M2) has been steadily increasing, and loan interest rates have remained at historically low levels... The People's Bank of China released financial data for the first three quarters on October 14. What are the highlights of the newly released financial data? Where has the credit money mainly flowed? How effective have the financial policy "combination punches" been?

The financial statistics released by the People's Bank of China on the same day show that at the end of September, the outstanding balance of RMB loans in China was 253.61 trillion yuan, a year-on-year increase of 8.1%; the M2 balance increased by 6.8% year-on-year, with the growth rate picking up compared to the previous month; the social financing scale was 402.19 trillion yuan, a year-on-year increase of 8%.

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"The data for the first three quarters show that loans have maintained stable growth, and liquidity is reasonably sufficient, which helps to support the continuous recovery and improvement of the economy." Wen Bin, Chief Economist of China Minsheng Bank, believes that the current financial total is generally stable, and the social financing scale has exceeded 400 trillion yuan for the first time, providing strong and effective support for the real economy. However, financial regulatory authorities are gradually reducing their focus on financial total indicators, and the growth of financial totals is in the stage of "slowing down and improving quality."

Looking at the structure, since the beginning of this year, corporate loans, especially long-term corporate loans, have increased significantly, providing ample financial support for stable investment.

Data shows that in the first three quarters, loans to enterprises (institutions) increased by 13.46 trillion yuan, becoming the main force in loan growth. Among them, long-term loans increased by 9.66 trillion yuan, accounting for more than 70%.

Specifically, where has the credit money flowed?

The reporter learned from the People's Bank of China that at the end of September, the balance of long-term loans in the manufacturing industry was 13.88 trillion yuan, a year-on-year increase of 14.8%, among which, the balance of long-term loans in high-tech manufacturing industry increased by 12% year-on-year; the balance of loans to specialized and refined new enterprises was 4.26 trillion yuan, a year-on-year increase of 13.5%; the balance of inclusive small and micro loans was 32.9 trillion yuan, a year-on-year increase of 14.5%. The growth rates of these loans are all higher than the growth rate of all loans in the same period.

"The credit structure continues to optimize." Dong Ximiao, Chief Researcher at China United, said that in recent years, China's economic structure has been transforming and upgrading, green development, scientific and technological innovation, and other new drivers have accelerated the formation, and the credit structure has also been adjusted accordingly. A number of structural monetary policy tools have focused on the real economy, guiding more and more credit resources to flow into major strategies, key areas, and weak links.

In addition, China's interest rate level has remained stable with a downward trend, which helps to reduce the financing costs for enterprises and residents and reduce interest burdens.

The reporter learned from the People's Bank of China that in September, the interest rate on newly issued personal housing loans was about 3.32%, about 2 basis points lower than the previous month, and about 78 basis points lower than the same period last year; the weighted average interest rate on newly issued corporate loans was about 3.63%, about 21 basis points lower than the same period last year, both at historical lows.Since the beginning of this year, China's economic operation has encountered some new situations and issues, with weak social expectations and a lack of effective financing demand in the short term. In response, financial regulatory authorities have intensified their policy efforts and introduced a package of incremental policies, focusing on boosting confidence.

Starting in late September, the People's Bank of China (PBOC) quickly implemented a package of incremental policies: reducing the reserve requirement ratio and policy interest rates, lowering the interest rates on existing housing loans, and creating structural monetary policy tools to support the stable development of the stock market...

"With the continuous implementation of the incremental policy package, effective social demand will gradually recover," said Wen Bin, noting that the policy "combination punch" introduced by the PBOC was beyond expectations and strong, grasping two key points: real estate and the capital market.

At present, major commercial banks have issued relevant announcements on the batch adjustment of existing housing loan interest rates, clarifying specific operational matters, promoting the stable implementation of this adjustment arrangement, and giving borrowers more confidence.

Recently, the effects of previous policies have gradually emerged, and positive changes have occurred in the real estate market: the popularity of the real estate market in many places has begun to warm up, and transaction activity has increased; the phenomenon of residents repaying housing loans in advance has decreased, and expectations for the real estate market have improved.

A staff member of a state-owned bank's Shenzhen branch revealed that since September 25, the average daily application volume for early repayment of personal mortgages at the bank has decreased by 60% compared to the average level in the first half of September.

The PBOC previously announced key work for the second half of the year, clearly proposing to continue implementing a prudent monetary policy, increase financial support for the real economy, and shift the focus more towards benefiting people's livelihoods and promoting consumption.

PBOC Governor Pan Gongsheng also stated that financial institutions would be guided to scientifically assess risks, restrain financing supply to overcapacity industries, and more targetedly meet reasonable consumer financing needs. At the same time, policy synergy should be leveraged to promote the matching of supply and demand.

"Effectively implement existing policies and intensify the introduction of incremental policies" - the Politburo meeting of the CPC Central Committee held on September 26 made clear arrangements, demonstrating the Party Central Committee's confidence and determination to fully boost the economy.

Reporters learned that in the next stage, the PBOC will further implement a prudent monetary policy, closely observe the effects of previous policies, and accelerate the policy's effectiveness. There is still ample room and reserves for monetary policy, which will continue to perform counter-cyclical adjustments.Dong Xiaomiao stated that against the backdrop of accelerating the transformation of old and new drivers, in the future, efforts to stimulate domestic demand, especially in expanding consumer demand, will also be made in conjunction with other macro policies through monetary policy. This will create a suitable monetary and financial environment to activate the internal dynamics and vitality of the economy.