What signal is being released? Expert interpretation: Financial data released in July | Monetary policy | Finance | Data
The People's Bank of China released financial statistics for July on the 11th.
In July, RMB loans increased by 345.9 billion yuan, a year-on-year decrease of 349.8 billion yuan.
In July, the increase in social financing scale was 528.2 billion yuan, a year-on-year decrease of 270.3 billion yuan.
The combination of multiple factors has led to a decline in financial data for July
For the change in financial data in July, the reporter also consulted multiple experts, scholars, and banking professionals. Overall, there are several main reasons.
Firstly, there are seasonal factors, and July is usually a small month for credit disbursement.
In the past, there was a pattern of 3322 bank credit disbursements, which was four quarters a year. The first two quarters usually had more disbursement, while the last two quarters had less disbursement. July happened to be the beginning of the third quarter. In addition, in June, various banks issued a total of 3.05 trillion yuan in loans, and the high growth of credit scale in June will inevitably have a certain overdraft effect on July's credit demand. This overdraft effect will significantly increase the fluctuation of new loan scale between months. This situation also occurred multiple times in April, July, and October 2022.
Of course, insufficient demand is also an important reason for the decline in credit in July.
At present, the recovery trend of China's economy is not yet stable, and the financing demand for the real economy is still relatively weak. Especially with the further decline of the real estate market, the demand for credit in physical sectors such as enterprises and residents is not strong. At the same time, the implementation of interest rate cuts and the reduction of LPR quotations in June may have formed a strong expectation of a downward trend in interest rates among loan holders, which may lead to some enterprises or residents delaying the release of financing needs and waiting for lower financing costs.
There is still a lot of room for monetary policy
Many experts believe that it is necessary to comprehensively examine the volatility of financial data in July. The disbursement of credit is a continuous process, and we cannot just focus on one month's loan increment.
Liang Si, a researcher at the Bank of China Research Institute, said, "If we observe the overall changes since 2023, we can see that in terms of total volume, liquidity is reasonable and abundant, and monetary credit is steadily growing."
Although the total amount is relatively low, industry insiders believe that there are highlights in the financial data for July. At the end of July, the important indicator of money supply, M2, and the year-on-year growth rate of loan balance were 10.7% and 11.1%, respectively, maintaining a high level, indicating that the financial support for the real economy is still stable. The reporter also learned from several large banks that in July, inclusive small and micro loans, green loans, manufacturing medium and long-term loans, and private enterprise loans all grew faster than the growth rate of all loans year-on-year, and the credit structure of banks continued to optimize.
At the recent work conference for the second half of 2023, the People's Bank of China proposed to continue to implement a precise and robust monetary policy, continuously improve and stabilize market expectations, and create a favorable monetary and financial environment for stable growth of the real economy.
Several experts believe that it is worth paying attention to how the People's Bank of China will comprehensively utilize various monetary policy tools and focus on enhancing new growth momentum in the future.
Wen Bin, Chief Economist of Minsheng Bank, said, "The new credit added in July has returned to a low level, and the stability and sustainability of credit expansion urgently need to be strengthened. Therefore, the July Politburo meeting focused on the three major goals of 'expanding domestic demand, boosting confidence, and preventing risks', proposing to increase macroeconomic policy regulation, strengthen countercyclical regulation, and policy reserves, clearly releasing signals to support the real economy."
The Chief Economist of CITIC Securities clearly believes that "since the end of July, multiple stable growth policies have been introduced, but it will take time to transmit them to credit demand."
Dong Ximiao, a researcher at the Financial Research Institute of Fudan University, said, "In the past three years, China has not implemented strong stimulus policies. China has a large space for monetary policy, and policy tools and reserves are relatively abundant."
Market insiders believe that the weighted average reserve requirement ratio of financial institutions in China is currently about 7.6%, and there is still some room for reserve requirement reduction. The overall policy of reducing the reserve requirement ratio in August is expected to accelerate its implementation.
In addition, measures such as activating the capital market and promoting a package of debt restructuring plans are being formulated and implemented. The capital market is closely linked to the real economy, and increasing the activity of the capital market will also drive the recovery of the real economy.
From the perspective of the real estate market, relevant policies are accelerating their adjustment and optimization. Policies are being implemented in response to urban conditions, housing policies are being relaxed and structurally optimized, and the construction of affordable housing and the renovation of urban villages are also expected to accelerate their implementation and effectiveness; Recently, the People's Bank of China has clearly proposed specific measures such as "continuing to guide the downward trend of personal housing loan interest rates and down payment ratios" and "guiding commercial banks to adjust the interest rates of existing personal housing loans in an orderly manner in accordance with the law". Once implemented, it will also promote the stable and healthy development of the real estate market.
The recent Central Politburo meeting clearly stated the need to make good use of policy space, find the right direction for development, and solidly promote high-quality economic development. We need to implement precise and effective macroeconomic regulation, strengthen countercyclical regulation and policy reserves. We must continue to implement proactive fiscal policies and prudent monetary policies, continue, optimize, improve, and implement tax and fee reduction policies, leverage the role of aggregate and structural monetary policy tools, and strongly support technological innovation, the development of the real economy, and small and micro enterprises. Recently, various departments and regions have also successively introduced measures. With the gradual implementation and effectiveness of various policies, the market will become more active, and the demand for funds will significantly increase. Finance will also better play a role in supporting the real economy.