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By Xia Bin

The latest financial data of the People's Bank of China was officially released: as of the end of July, the balance of broad money (M2) was 303.31 trillion yuan, a year-on-year increase of 6.3%, 0.1 percentage point higher than the end of last month; the stock of social financing scale increased by 8.2% year-on-year, 0.1 percentage point higher than the end of last month; the balance of various RMB loans increased by 8.7% year-on-year, and RMB loans increased by 13.53 trillion yuan in the first seven months...

An authoritative person told China News Service that the growth of total financial volume in July was basically stable, with the growth rate at the end of the month basically the same as that of the previous month, and the growth rate of social financing scale was higher than the nominal growth rate in the first half of the year.GDPThe growth rate (5%) was about 3.2 percentage points, maintaining a reasonable growth, reflecting the continued efforts of finance to support the real economy.

Where does the money come from?

The growth rate of total financial volume is higher than the growth rate of nominal GDP, and the overall growth is reasonable. In recent years, with the economic transformation and upgrading, insufficient effective demand and idle governance funds, the overall growth of total financial volume has slowed down and improved in quality.

It is worth noting that judging from the latest financial data, there are new characteristics in financing methods.

On the one hand, direct financing has accelerated. In July, corporate bond net financing was about 160 billion yuan, about 31 billion yuan more than the same period last year. Industry experts believe that this result is not easy to achieve in the context of preventing and resolving local debts and the overall contraction of municipal debt financing, indicating that some companies have replaced loans with bond issuance. In recent years, my country's direct financing market has developed rapidly, corporate bond financing channels have become more unobstructed, and are better adapted to the transformation of the economy to light-duty.

In addition, in July the Chinese governmentBondsNet financing was about 700 billion yuan, about 290 billion yuan more than the same period last year, which strongly supported the steady growth of social financing scale. The issuance of special bonds has been accelerated recently, and the issuance and use of ultra-long-term special government bonds have also been accelerated.

On the other hand, bill financing has grown significantly. Industry experts analyzed that it should be noted that on-balance sheet bills are a component of loans and an important financing channel for the real economy, especially small and medium-sized enterprises. Under the requirements of real transaction relationships and creditor-debtor relationships, bills have short terms, high convenience, and good liquidity. Small and medium-sized enterprises use bills to discount from banks, which is the same as obtaining funds from bank loans.

Especially when there is insufficient effective financing demand, banks need to increase their support for the real economy in the short term. However, due to insufficient project reserves, banks can increase direct and transfer discounts of bills and convert undiscounted bills representing corporate credit into on-balance sheet bill financing representing bank credit, thereby providing real financial support to enterprises.

The above-mentioned experts also mentioned that as the bill interest rate declines, the cost of bill financing for small and medium-sized enterprises will also be reduced accordingly, which can also stimulate financing demand.

Where to invest?

Since the beginning of this year, the People's Bank of China has continued to play the dual functions of the total amount and structure of monetary policy tools, continued to make efforts to do a good job in the "five major articles" of finance, and maintained a solid support for major strategies, key areas and weak links.

As a result, financial support for key areas has been stabilized and the credit structure has continued to be optimized. From the perspective of credit structure, financial services supporting the "five major articles" have continued to improve. At the end of July, the growth rates of medium- and long-term loans, green loans, and inclusive small and micro loans in the manufacturing industry were significantly higher than the growth rate of all loans.

In fact, credit resources are flowing more to key areas and weak links of the national economy. Specifically, at the end of July, the balance of medium- and long-term loans to the manufacturing industry was 13.63 trillion yuan, a year-on-year increase of 16.9%, of which the balance of medium- and long-term loans to high-tech manufacturing industries increased by 15.5% year-on-year; the balance of loans to "specialized, refined, special and innovative" enterprises was 4.17 trillion yuan, a year-on-year increase of 15%; the balance of inclusive small and micro loans was 32.1 trillion yuan, a year-on-year increase of 17%. The growth rates of the above loans are all higher than the growth rates of all loans in the same period.

However, industry experts also warned that as China's economic structure transformation and upgrading accelerates, loan "big guys" such as real estate and local financing platforms, which have traditionally been highly dependent on credit funds, are gradually adjusting, which is reflected in credit data as no growth or even contraction. The demand for loans in new driving forces such as technological innovation, advanced manufacturing, and green development will be difficult to fully continue in the short term, and will not be able to make up for the "pit" formed by the decline in loans in traditional fields, leading to fluctuations in credit growth.

As the economy gradually resumes a virtuous cycle, effective financing demand will also pick up. Industry experts believe that the effects of previous policies are still gradually emerging, which will drive the recovery of effective demand. In the future, the focus of economic policies will shift more to benefiting people's livelihood and promoting consumption, with the focus on boosting consumption to expand domestic demand. As consumption recovers, the economic cycle will be smoother, and new effective financing demand will be created.

The "squeeze out water" effect is still showing

In the opinion of authoritative sources, in the short term, the squeezing out of financial data will still have an impact on aggregate indicators. The growth rate of monetary supply indicators such as M2 and M1 has slowed down this year, which is largely affected by this factor. After squeezing out some of the inflated deposits and loans, financial data will fall back to a certain extent.

Especially considering that part of the corporate demand deposits in the early stage obtained relatively high returns through manual interest compensation, after these behaviors were standardized, corporate demand deposits declined, and some are gradually transforming into financial management. The impact in this regard will continue to manifest, resulting in a continued decline in M1 in recent months.

At the same time, "squeezing out water" promotes more real and concrete financial aggregate data. Authoritative sources said that in the past period, part of the funds in the growth of corporate debt were idle, and the loans were directly converted into deposits, which did not stimulate investment and affect the real economy. After the financial management department standardized these behaviors, the price ratio between deposit income and expected investment return rate changed, the arbitrage space disappeared, and some companies freed up funds to expand investment and increase R&D investment, which will be more conducive to financial support for the high-quality development of the real economy in the future.

A pharmaceutical company reported that after the standardization of manual interest payments, the company withdrew 200 million yuan of deposits in a major bank to build a new production workshop and purchase related equipment to expand reproduction.

"Squeezing out water" is also conducive to the healthy interaction of finance and economy. Industry experts believe that "squeezing out water" from financial data can also help solve the "chain trap" of corporate arrears, improve corporate capital turnover efficiency, better meet the effective financing needs of business entities, and improve the quality and level of financial services.

Source: National Express

Editor: Zhuge Ruixin

Editor: Wei Xi