China’s Financial Support Entities in Good Shape in First Quarter
According to the latest data from the People’s Bank of China, financial support entities were of sufficient quality in the first quarter of this year. RMB loans increased by 9.46 trillion yuan, hitting a high level in history, while the stock of social financing reached 390.32 trillion yuan, an 8.7% increase from the previous year. The balance of broad money (M2) also saw a year-on-year increase of 8.3%, reaching 304.8 trillion yuan.
Authoritative experts have noted that the scale of social financing and loan issuance in the first quarter met market expectations, effectively meeting the financing needs of the real economy. While loan growth has slowed down, the quality and efficiency of financial services for the real economy have significantly improved.
The distribution of loans in the first quarter was steady and balanced. The balance of RMB loans at the end of March was 247.05 trillion yuan, a year-on-year increase of 9.6%, with a 0.5 percentage points decrease from the previous month.
Experts pointed out that the growth in new RMB loans, which exceeded 1 trillion yuan compared to the same period last year, is at a historically high level. The People’s Bank of China has been guiding financial institutions to strengthen balanced credit extension since the second half of 2023, in an effort to sustainably support the real economy.
Despite a year-on-year decrease in new loans, the credit structure continues to be optimized. In the first quarter, loans to enterprises accounted for over 80% of all new loans, with a significant focus on green loans, inclusive small and micro loans, and manufacturing medium and long-term loans.
In the effort to support the real economy, loan interest rates have reached record lows. The weighted average interest rate of new corporate loans in March was 3.75%, while the interest rate of new personal housing loans was 3.71%, both historical lows.
Looking ahead, experts predict that the focus will be on stabilizing the total amount of credit, smoothing the pace of credit extension, and adjusting and optimizing the credit structure. Financial institutions will explore credit needs, revitalize existing financial resources, and support the development of direct financing.
The market expects the second quarter to see intensive issuance of government bonds, with the People’s Bank of China using various tools to ensure smooth issuance and maintain market stability.
Overall, the financial support for the real economy in China is expected to be more sustainable this year, with a focus on balanced and quality credit extension to drive economic growth.