my country’s renminbi loans increased by 1.22 trillion yuan in August, and new government bond financing hit a new high in the year
According to a report released by the People’s Bank of China on the 10th, at the end of August, the balance of broad money (M2) was 231.23 trillion yuan, a year-on-year increase of 8.2%, and the growth rate was 0.1 and 2.2 percentage points lower than the end of the previous month and the same period last year. In August, RMB loans increased by 1.22 trillion yuan, which was 63.1 billion yuan less than the same period last year. The increase in social financing was 2.96 trillion yuan, 629.5 billion yuan less than the same period last year.
Regarding the reason for the decline in M2 growth, Wen Bin, chief researcher of China Minsheng Bank, said that although fiscal deposits increased by 172.4 billion yuan in August, 361.5 billion yuan less than the same period last year, the new RMB loans in August were still slightly lower than the same period last year. In addition, the base figure of the same period last year was still at a relatively high level above 10%, and the growth rate of M2 dropped slightly that month.
“The scissors gap between the growth rates of M1 and M2 has widened since May. At the end of August, the balance of M1 increased by 4.2% year-on-year, and the growth rate was 0.7 percentage points lower than the end of the previous month, making the scissors gap between the growth rates of M1 and M2 widened to 4%. This reflects the weakening of the market’s expectations for future economic trends.” Tang Jianwei, chief researcher at the Financial Research Center of Bank of Communications, said that the decline in M2 growth was mainly squeezed by two factors: First, the demand for physical financing was insufficient, and the scale of credit issuance was more conservative than the original one. Market expectations were weaker, with a year-on-year increase. Second, the increase in government bond issuance was greater than market expectations, and the single-month scale hit a new high since the fourth quarter of last year.
Affected by extreme weather in some areas and epidemics in some areas, the overall production activity of enterprises is still not high. In August, the new medium- and long-term loan demand of enterprises (institutions) was 521.5 billion yuan, an increase of more than 200 billion yuan compared with the same period last year, and short-term loans decreased by 114.9 billion yuan, indicating that the demand for physical financing was insufficient.
“Following the deployment of the Politburo meeting on July 30 to reasonably grasp the progress of budgetary investment and local government bond issuance, special bond issuance has accelerated. In August, new government bond financing was 973.8 billion yuan, a record high this year, but it was still higher than last year. During the same period, there was a decrease of 405 billion yuan. It is expected that the issuance of special bonds will accelerate before the end of the year, which will support social financing.” Wen Bin said that the growth rate of currency and credit expansion has slowed, while the demand for effective financing has weakened, and macro policies need to be implemented. Cross-cyclical adjustments, intensified efforts to boost domestic demand, stabilize market expectations, maintain a reasonable growth in credit scale, and ensure that the economy operates within a reasonable range.
China Postal Savings Bank researcher Lou Feipeng believes that the growth rate of M2 in August was slightly lower than that in July, and the year-on-year growth rate of M1 continued to continue the downward trend since the beginning of the year, reflecting that the demand for corporate deposits is still declining. The scale of social financing and the year-on-year growth rate of loans are also declining, while medium and long-term corporate loans have increased more, indicating that corporate investment needs are relatively good.
“After the monetary and credit situation analysis symposium on August 23, the bill interest rate came up, which means that the bank credit may have been increased, and the effect of September’s’wide credit’ will be reflected to a certain extent.” Chief macro analysis of Dongfang Jincheng Shi Wang Qing said that the growth rate of credit, social financing and M2 is expected to rebound slightly in the fourth quarter. The strength of financial support for the real economy in the future will mainly depend on the macroeconomic trends affected by the evolution of the epidemic at home and abroad. In the context of my country’s ample room for monetary policy, the policy side will move on the spot. In the future, policy tools such as a full-scale RRR cut, re-lending and rediscounting, and MLF operations have room for effort. (Reporter Yao Jin)
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