China’s credit and social financing rebounded sharply in August, according to data released by the People’s Bank of China. RMB loans increased by 1.36 trillion yuan ($211 billion) in August, a year-on-year increase of 86.8 billion yuan. The cumulative increase in RMB loans for the first eight months of the year was 17.44 trillion yuan, up 1.76 trillion yuan from the previous year. Similarly, social financing increased by 3.12 trillion yuan in August, 631.6 billion yuan higher than the same period last year, bringing the cumulative increase for the first eight months to 25.21 trillion yuan.
Analysts believe these figures demonstrate the acceleration of the credit easing process and will contribute to future economic recovery. Wang Qing, chief macro analyst of Oriental Jincheng, states that the increase in new credit and social financing indicates that the credit easing process is picking up pace again. He predicts that both new credit and social financing will continue to expand in September.
In terms of credit structure, RMB loans to households increased by 392.2 billion yuan in August, while loans to enterprises increased by 948.8 billion yuan. In particular, medium and long-term corporate loans continued to be the main support, while short-term loans to households decreased. Wen Bin, chief economist of Minsheng Bank, says the credit structure optimization reflects improved market expectations and sentiment.
The increase in social financing in August exceeded market expectations, primarily driven by bond financing. Net government bond financing increased by 1.18 trillion yuan compared to the same period last year, while net corporate bond financing increased by 269.8 billion yuan. The acceleration of local government bond issuance and the recovery of the bond market were key drivers of this growth.
Looking ahead, analysts believe that further support policies will be implemented to continue the credit easing process. The potential for Reserve Requirement Ratio (RRR) cuts remains, and the accelerated issuance of local government special bonds is expected to provide strong support to social financing. Overall, the rebound in credit and social financing in August suggests positive momentum for China’s economic recovery.