news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

summary

the relevant person in charge of the central bank said that it will further reduce the financing costs of enterprises and residents' credit, and take maintaining price stability and promoting a moderate price recovery as an important consideration in grasping monetary policy.

text｜ county down

edit ｜ zhang wei

credit demand continued to run at a low level in august.

on the evening of september 13, the people's bank of china released financial statistics for august.

data showed that in august, the growth rates of m1 (narrow money) and m2 (broad money) were -7.3% and 6.3% respectively. the m2-m1 spread widened to 13.6%, the highest since june 1996, indicating insufficient investment vitality of enterprises.

in terms of social financing scale, according to citic securities' calculation, social financing increased by more than 3 trillion yuan in august, a year-on-year increase of 98.1 billion yuan. among them, the net financing scale of government bonds exceeded 1.6 trillion yuan, a year-on-year increase of 437.1 billion yuan, which is the main support for social financing growth.

credit data showed that rmb loans increased by 14.43 trillion yuan in the first eight months of 2024. new loans in august were 900 billion yuan, a year-on-year decrease of about 460 billion yuan.

"the total amount of credit in august was weak, and the year-on-year decrease was higher than the previous month, reflecting that residents and enterprises are still less willing to increase leverage." mingming, chief economist of citic securities, said, "the subsequent acceleration of government bond issuance is expected to continue to support social financing."

on that day, the central bank rarely released a public interpretation of the financial statistics for a single month.

a relevant official from the central bank said that the financial data in august mainly showed three characteristics: first, the total amount of finance grew reasonably; second, the credit structure continued to be optimized; and third, interest rates continued to decline at a low level.

regarding the next monetary policy, the aforementioned person in charge said that they will start to introduce some incremental policy measures to further reduce corporate financing and household credit costs, and expressed that maintaining price stability and promoting a moderate price recovery should be an important consideration in grasping monetary policy.

in this regard, many analysts said that the federal reserve is expected to start cutting interest rates in september, which will help open up the monetary policy space of the people's bank of china. it is expected that the central bank will cut interest rates by 10bp-20bp (basis points) in the fourth quarter. at the same time, as the issuance of government bonds accelerates, the central bank is expected to cut the reserve requirement ratio to cooperate.

in addition, calls for lowering the interest rates on existing mortgage loans have resurfaced. "lowering the interest rates on existing loans can not only reduce consumers' repayment burden and stimulate consumption potential, but also effectively curb the phenomenon of early loan repayments and offset the loss of bank interest income to a certain extent." sheng songcheng, professor of economics and finance at china europe international business school, suggested lowering the interest rates on existing mortgage loans to release the purchasing power of the household sector.

credit demand continued to be weak.

loan interest rates are falling

according to citic securities' estimates, looking at credit data by sector, bill financing increased by 545.1 billion yuan in august, an increase of 197.9 billion yuan year-on-year, becoming the main driving force for credit growth that month.

huatai securities fixed income research believes that the pmi (purchasing managers' index) in august was 49.1%, and the bill interest rate fell sharply in the middle of the month, indicating that the reality of weak financing demand has not changed, and bills have become the main tool for loan volume.

from the perspective of the resident sector, in august, new short-term loans to residents increased by 71.6 billion yuan, a year-on-year increase of 160.4 billion yuan; new medium- and long-term loans to residents increased by 120 billion yuan, a year-on-year increase of 40.2 billion yuan.

"residents' short-term loans continued to decline, indicating that residents' willingness to consume is not strong. medium- and long-term loans also performed generally due to residents' weak willingness to buy houses," mingming said.

in terms of corporate loans, short-term corporate loans decreased by 190 billion yuan in august, a decrease of 149.9 billion yuan year-on-year; medium- and long-term corporate loans increased by 490 billion yuan, a decrease of 154.4 billion yuan year-on-year. among them, short-term corporate loans have increased less or decreased more for 14 consecutive months, and medium- and long-term corporate loans have increased less for six consecutive months.

mingming believes that the fact that corporate medium- and long-term loans have increased less year-on-year for six consecutive months shows that companies' expected profit margins have narrowed and their willingness to invest in production has cooled marginally.

the growth rate of money supply also showed similar signs.

in august, the year-on-year growth rate of m1 was -7.3%, the lowest since statistics were available, and it has been negative for five consecutive months.

recently, sheng songcheng said in an exclusive interview with "caixin" that the negative growth of m1 reflects the main problem facing the current macro-economy - insufficient effective demand.

m1 is mainly composed of cash and demand deposits of enterprises and institutions. enterprise demand deposits often reflect the activity of enterprise operation and investment. if an enterprise places the funds in demand deposits after receiving them, it means that it has a strong investment intention because it needs to use these funds in the short term, and vice versa.

at the same time, sheng songcheng also mentioned that currently, a large number of chinese residents make payments through electronic payment methods such as wechat and alipay. the essence of these funds is personal demand deposits or reserve funds of third-party payment institutions. this part of the currency has not yet been counted in m1, and there are certain omissions.

in addition, many analysts said that the impact of the regulatory ban on "manual interest payments" in april is still lingering, and the deposit interest rate cut at the end of july has led to the regularization of some demand deposits, and the flow of time deposits to non-bank institutions such as wealth management, causing certain disturbances to m1.

deposit data showed that corporate deposits increased by 350 billion yuan in august, a year-on-year decrease of 539 billion yuan; deposits of non-bank financial institutions increased by 630 billion yuan, a year-on-year increase of about 1.36 trillion yuan.

in terms of social financing, as of the end of august, the balance of social financing scale was 39.856 trillion yuan, an increase of 8.1% year-on-year.

in august, the scale of new social financing was 3.03 trillion yuan, of which net financing of government bonds was 1.61 trillion yuan, an increase of 437.1 billion yuan year-on-year. except for government bonds and trust loans, the rest of social financing items showed a year-on-year decrease, of which net financing of rmb loans was 1.04 trillion yuan, a year-on-year decrease of 297.1 billion yuan.

in this regard, relevant officials of the central bank believe that the total amount of finance maintains a reasonable growth.

"in august, the growth rates of the balances of both social financing scale and rmb loans were above 8%, about 4 percentage points higher than the growth rate of nominal gdp (gross domestic product) in the first half of the year. against the backdrop of accelerated structural transformation, financial data continued to maintain steady growth on a high base, and support for the real economy was solid," said the official.

from the perspective of credit investment structure, at the end of august, the balance of medium- and long-term loans to the manufacturing industry was 13.69 trillion yuan, a year-on-year increase of 15.9%, of which the balance of medium- and long-term loans to high-tech manufacturing industries increased by 13.4% year-on-year. the balance of loans to technology-based smes was 3.09 trillion yuan, a year-on-year increase of 21.2%. the balance of loans to "specialized, refined, and innovative" enterprises was 4.18 trillion yuan, a year-on-year increase of 14.4%. the balance of inclusive small and micro loans was 32.21 trillion yuan, a year-on-year increase of 16.0%.

"the above loan growth rates are all higher than the growth rates of all loans in the same period." a relevant person in charge of the central bank said, "credit resources are flowing more to major strategies, key areas and weak links, which strongly supports the accelerated optimization of the economic structure."

since the beginning of this year, the central bank has repeatedly stated that the obsession with scale in financial aggregate targets should be abandoned.

in a public speech at the lujiazui forum in june, pan gongsheng, governor of the central bank, said that when monetary and credit growth has shifted from supply constraints to demand constraints, if the focus is still on quantitative growth or even a "scale complex", it is obviously contrary to the law of economic operation. it is necessary to use the total amount of finance as an indicator of observation, reference and expectation, and pay more attention to the role of interest rate regulation.

according to central bank data, interest rates continued to decline at a low level in august.

specifically, the weighted average interest rate of newly issued corporate loans was 3.57%, 8 basis points lower than last month and 28 basis points lower than the same period last year. the interest rate of newly issued inclusive small and micro loans was 4.48%, 8 basis points lower than last month and 34 basis points lower than the same period last year, both at historical lows.

the central bank will push for incremental policies.

interest rate cut expected in fourth quarter

the day after the release of financial statistics, the national bureau of statistics released data showing that the total retail sales of consumer goods in august increased by 2.1% year-on-year, the second lowest in the year. in terms of investment, fixed asset investment in the first eight months increased by 3.4% year-on-year, the growth rate hit the lowest point in the year, among which real estate development investment decreased by 10.2% year-on-year, the same as the previous month.

wang qing, chief macro analyst at orient securities, believes that due to multiple factors such as insufficient effective demand, heavy rains and floods, and an increase in the base figure in the same period last year, macro data in august showed an overall downward trend on both the supply and demand sides, and the "strong supply and weak demand" characteristics in the macro economy are still relatively obvious.

at the same time, wang qing said that the economic growth momentum in august continued the slowdown trend since the second quarter. in addition to the impact of extreme weather, the main reason behind this is that the endogenous growth momentum of the economy represented by residents' consumption and private investment is weak against the backdrop of continued adjustments in the real estate industry.

price data released on september 9 showed that the national cpi (consumer price index) rose by 0.6% year-on-year in august, the second highest growth rate of the year, but there is still a gap with the annual price target of around 3%.

economic and financial data both point to insufficient effective domestic demand. recently, several authoritative economists have discussed how to boost demand.

yu yongding, a member of the chinese academy of social sciences, believes that at the macroeconomic level, china's problem is insufficient effective demand. therefore, china must use expansionary fiscal and monetary policies to stimulate the economy and increase aggregate demand.

sheng songcheng also believes that the main contradiction in the current economic operation is insufficient consumer demand, and suggests that some incremental fiscal and monetary policies can be used to increase residents' income and enhance consumption motivation.

regarding the next monetary policy, the relevant person in charge of the aforementioned central bank said that they will start to introduce some incremental policy measures to further reduce corporate financing and household credit costs, and expressed that maintaining price stability and promoting a moderate price recovery should be an important consideration in grasping monetary policy.

what incremental policy measures might the central bank introduce?

"taking into account the economic and price trends in the future, as well as the macro policy orientation, it is expected that the central bank will have a high probability of cutting interest rates by 10bp-20bp in the fourth quarter," said wang qing. "in the future, the policy will further increase support for the real estate industry, and it is expected that the second round of interest rate cuts for existing mortgage loans will be launched."

recently, lu ting, chief economist of nomura china, also publicly stated that as the fed's interest rate cut is finalized, the people's bank of china is expected to slightly cut interest rates by 10bp before the end of the year. however, lu ting reminded that china is not currently facing a liquidity problem, and the effect of interest rate cuts and reserve requirement ratio cuts on boosting demand may be relatively limited.

in lu ting's view, lowering the interest rate on existing mortgage loans is also a possible path to lower interest rates.

earlier this year, lu ting called on the central bank to lower the interest rates on existing mortgages. in early september, lu ting updated his forecast, saying that he expected the central bank to lower the interest rates on existing mortgages by 40 basis points. "i think the 40 basis points takes into account the pressure on the net interest margin of banks on the one hand, and the pressure on home buyers to repay their loans on the other hand," lu ting said.

sheng songcheng also suggested lowering the interest rate on existing housing loans to release the purchasing power of the household sector.

recently, some media reported that the central bank will announce a reduction in the interest rate of existing mortgage loans as early as september, and the cumulative reduction is expected to be 80bp. the central bank did not respond to this.

in addition, wang qing believes that incremental fiscal policies such as issuing more treasury bonds may be introduced in the future, and the central bank may lower the reserve requirement ratio in the fourth quarter to support the issuance of government bonds.

"the 'good steel' of reserve requirement ratio cut must be used on the 'cutting edge'." zhang xu, chief fixed income analyst at everbright securities, believes that among many monetary policy tools, the liquidity provided by reserve requirement ratio cut has the longest term and the lowest cost, and the policy effect is quite obvious. such an efficient and precious tool should be used at critical times. in zhang xu's view, when the cd (interbank deposit certificate) interest rate is high, it is the right time to cut the reserve requirement ratio.

at the previous state council information office press conference, relevant officials of the central bank have released some incremental policy signals.

zou lan, director of the central bank's monetary policy department, said that the current average statutory reserve ratio of financial institutions is about 7%, and there is still some room.

regarding when incremental policies such as reserve requirement ratio cuts will be implemented, zou lan said that policy adjustments such as reserve requirement ratio cuts and interest rate cuts still need to observe economic trends. the central bank will closely observe the policy effects and reasonably grasp the intensity and rhythm of monetary policy regulation based on the economic recovery, target achievement and specific problems facing the macroeconomic operation.