China‘s Financial Data for First 10 Months Signals Economic Recovery & diversified Financing
Recent financial data from the People’s Bank of China indicates a strengthening economic landscape, characterized by increased corporate activity, recovering consumer demand, and a shift towards more diversified financing methods. The data covers the first ten months of the year and points to a moderately loose monetary policy supporting growth.
Narrow money supply (M1) saw a year-on-year increase of 6.2%. Notably, the gap between growth in M2 (broad money supply) and M1 has narrowed substantially compared to the same period last year, suggesting increased velocity of money.
According to Zhang Jun, chief Economist at Milky way Securities, thes figures reflect robust corporate production and operations alongside a resurgence in personal investment and consumption. He emphasized that lowering the interest burden on businesses and individuals is crucial for unlocking financing needs and fueling economic activity.
Supporting this, the weighted average interest rate on new corporate loans (local and foreign currencies) in october fell to 3.1%, a decrease of 40 basis points year-on-year. New personal housing loan rates also saw a reduction, dropping to 3.1%, down 8 basis points from the previous year. Zhang Jun attributed these declines to the People’s Bank of china’s efforts to broaden countercyclical adjustment policies, improve market-based interest rate controls, and promote transparency in corporate loan financing costs. Further reductions in personal interest burdens are expected with the implementation of fiscal discounts on personal consumption loans.
Beyond customary lending, bond financing has experienced substantial growth. Cumulative social financing increased by 30.9 trillion yuan in the first ten months of the year. Net corporate bond financing reached 1.82 trillion yuan, an increase of 136.1 billion yuan year-on-year, while net government bond financing totaled 11.95 trillion yuan, a significant rise of 3.72 trillion yuan.
This shift is reflected in the composition of new social financing, with government and corporate bonds now accounting for approximately 45% of the total. Zhang Xu, chief Fixed Income Analyst at Everbright Securities, highlighted this trend as a sign of a maturing financial system. Companies are increasingly diversifying their financing channels, moving beyond reliance on bank loans to incorporate bonds, stocks, and other market-oriented methods.
Looking ahead, the People’s Bank of China intends to maintain a moderately loose monetary policy and ensure relatively loose social financing conditions. The bank will prioritize utilizing monetary and credit policies to support major national strategies, key economic areas, and address existing weaknesses. Efforts will continue to refine market-oriented interest rate mechanisms to further reduce overall social financing costs.
(Source: Xinhua News Agency)
Original title: Financial Focus丨Where will the nearly 15 trillion yuan in new loans be invested? –A look at my country’s financial data for the first 10 months
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