Supported by government crediting, the amount of new renminbi loans and new social financing in China in August both rebounded significantly. The financial 'squeeze water effect' continued, M1 money supply continued to decline, and the negative scissors gap of M1-M2 growth rate further widened.

On Friday, September 13, the People's Bank of China released data showing:

China's new RMB loans increased by 14.43 trillion yuan from January to August, with household loans increasing by 1.44 trillion yuan. Calculating with the previous value, new RMB loans in August were 900 billion yuan, a significant rebound from 260 billion yuan in July, with 190 billion yuan in new household loans in August.

RMB deposits increased by 12.88 trillion yuan from January to August, with household deposits increasing by 9.65 trillion yuan. Calculating with the previous value, new RMB deposits in August were 2.22 trillion yuan, with household deposits increasing by 710 billion yuan.

The scale of social financing in January-August increased by 21.9 trillion yuan, 3.32 trillion yuan less than the same period last year. From January to July this year, it was 18.87 trillion yuan. Based on this, social financing increased by 3.03 trillion yuan in August, a significant rebound from the previous value of 770 billion yuan.

By the end of August, the stock of social financing was 398.56 trillion yuan, an 8.1% year-on-year increase.

China's M2 money supply in August increased by 6.3% year-on-year, unchanged from the previous value. China's M1 money supply in August decreased by 7.3% year-on-year, further expanding from the 6.6% decline in July.

According to the latest article in the Shanghai Securities News, affected by factors such as weak effective financing demand and financial data 'squeezing water', the marginal growth of the overall financial volume in August has slowed down. Analysts indicate that as a leading indicator of future loan disbursements, there is also an inadequate number of loan project reserves. However, at the same time, both enterprise and individual loan interest rates continue to decline, alleviating the interest burden on the operating entities. Looking ahead, the rectification of manual interest subsidies and other 'squeezing water' work is nearing completion, and the quality and efficiency of financial services will continue to improve, providing stable support for the development of the real economy.

The People's Bank of China stated that there are three main features in the data for August. Firstly, a reasonable growth in overall finance. The recent growth rate of M2 balance has been relatively stable. The growth rates of the scale of social financing and RMB loans in August are both above 8%, approximately 4 percentage points higher than the nominal GDP growth rate in the first half of the year. Against the backdrop of accelerated structural transformation, financial data is maintaining steady growth on a high base, providing solid support to the real economy.

The People's Bank of China will adhere to a supportive monetary policy stance to create a favorable monetary and financial environment for the economic recovery and improvement. Monetary policy will be more flexible, appropriate, precise, and effective, increasing regulatory intensity, speeding up the implementation and effectiveness of financial policy measures already introduced, initiating some incremental policy measures, further reducing the financing costs for enterprises and residents, and maintaining reasonable and ample liquidity. Maintaining price stability and promoting moderate price increases are key considerations in shaping monetary policy, more targeted to meet reasonable consumer financing needs.

Continuously strengthen the coordination of macroeconomic policies, support the more effective implementation of an active fiscal policy, focus on expanding domestic demand, promote a balanced emphasis on consumption and investment, increase emphasis on consumption, eliminate outdated production capacity, promote industrial upgrading, and support total supply and total demand to achieve dynamic balance at a higher level.

In the first 8 months, new social financing amounted to 21.9 trillion yuan, a decrease of 3.32 trillion yuan compared to the same period last year.

Preliminary statistics show that the incremental scale of social financing in the first eight months of 2024 accumulated to 21.9 trillion yuan, 3.32 trillion yuan less than the same period last year. Among them:

The RMB loans issued to the real economy increased by 13.42 trillion yuan, a decrease of 3.57 trillion yuan compared to the same period last year;

The foreign currency loans issued to the real economy, converted into RMB, decreased by 158.3 billion yuan, 80 billion yuan less than the same period last year;

Entrusted loans decreased by 54.8 billion yuan, a decrease of 139.7 billion yuan year-on-year.

Trust loans increased by 355.6 billion yuan, an increase of 331.9 billion yuan year-on-year.

Undiscounted bank acceptance drafts decreased by 278.8 billion yuan, a decrease of 280.8 billion yuan year-on-year.

Net financing of corporate bonds was 1.78 trillion yuan, an increase of 203.1 billion yuan year-on-year.

Net financing of government bonds was 5.64 trillion yuan, an increase of 679.8 billion yuan year-on-year.

Domestic stock financing for non-financial enterprises was 157.6 billion yuan, a decrease of 484.2 billion yuan year-on-year.

As of the end of August, the stock of social financing was 398.56 trillion yuan, an increase of 8.1% year-on-year.

Preliminary statistics show that as of the end of August 2024, the stock of social financing was 398.56 trillion yuan, an increase of 8.1% year-on-year. Among them:

The balance of RMB loans issued to the real economy is 248.89 trillion yuan, a year-on-year increase of 8.1%.

The balance of foreign currency loans issued to the real economy converted into RMB is 1.5 trillion yuan, a year-on-year decrease of 17.4%.

The balance of entrusted loans is 11.21 trillion yuan, a year-on-year decrease of 1.1%; the balance of trust loans is 4.26 trillion yuan, a year-on-year increase of 13%.

The balance of undiscounted bank acceptance bills is 2.21 trillion yuan, a year-on-year decrease of 17.3%.

The balance of corporate bonds is 32.27 trillion yuan, a year-on-year increase of 2.6%; the balance of government bonds is 75.44 trillion yuan, a year-on-year increase of 15.8%.

The balance of domestic stocks of non-financial enterprises is 11.59 trillion yuan, a year-on-year increase of 2.7%.

In terms of structure:

At the end of August, the balance of RMB loans issued to the real economy accounted for 62.4% of the stock of social financing at the same period, a decrease of 0.1 percentage points year-on-year.

The proportion of foreign currency loans granted to the real economy accounted for 0.4% of the balance of RMB, a decrease of 0.1 percentage points year-on-year.

The proportion of entrusted loans accounted for 2.8%, a decrease of 0.3 percentage points year-on-year; the proportion of trust loans accounted for 1.1%, an increase of 0.1 percentage points year-on-year.

The proportion of undiscounted bank acceptance bills accounted for 0.6%, a decrease of 0.1 percentage points year-on-year.

The proportion of corporate bonds accounted for 8.1%, a decrease of 0.4 percentage points year-on-year; the proportion of government bonds accounted for 18.9%, an increase of 1.2 percentage points year-on-year.

The proportion of non-financial enterprise domestic stocks accounted for 2.9%, a decrease of 0.2 percentage points year-on-year.

The negative scissors difference between the growth rates of M1 and M2 further widens.

At the end of August, the broad money supply (M2) balance was 305.05 trillion yuan, a year-on-year growth of 6.3%; the narrow money supply (M1) balance was 63.02 trillion yuan, a year-on-year decrease of 7.3%; the negative scissors difference between the growth rates of M1 and M2 further widens. The balance of currency in circulation (M0) was 11.95 trillion yuan, a year-on-year growth of 12.2%. Net cash injection totaled 602.8 billion yuan in the first eight months.

In the first eight months, RMB loans increased by 14.43 trillion yuan, and deposits increased by 12.88 trillion yuan.

At the end of August, the balance of domestic and foreign currency loans was 256.24 trillion yuan, an increase of 8% year-on-year. The end-of-month RMB loan balance was 252.02 trillion yuan, an increase of 8.5% year-on-year.

In the first eight months, RMB loans increased by 14.43 trillion yuan. By sector:

Household loans increased by 1.44 trillion yuan, of which short-term loans increased by 132.4 billion yuan, and medium- and long-term loans increased by 1.31 trillion yuan;

Enterprise loans increased by 11.97 trillion yuan, of which short-term loans increased by 2.37 trillion yuan, and medium- and long-term loans increased by 8.7 trillion yuan,

Bill financing increased by 759.7 billion yuan; non-bank financial institutions loans increased by 459.1 billion yuan.

At the end of August, the balance of foreign currency loans was $594 billion, a year-on-year decrease of 13.8%. Foreign currency loans decreased by $62.4 billion in the first eight months.

At the end of August, the balance of foreign currency deposits was 303.21 trillion yuan, a year-on-year increase of 6.6%. The balance of RMB deposits at the end of the month was 297.14 trillion yuan, a year-on-year increase of 6.6%.

In the first eight months, RMB deposits increased by 12.88 trillion yuan. Among them:

Household deposits increased by 9.65 trillion yuan, non-financial corporate deposits decreased by 2.88 trillion yuan, fiscal deposits increased by 960.6 billion yuan, and non-bank financial institution deposits increased by 3.59 trillion yuan.

At the end of August, the balance of foreign currency deposits was $853.1 billion, a year-on-year increase of 7.3%. Foreign currency deposits increased by $55.3 billion in the first eight months.

Interbank borrowing and cross-border RMB settlement.

In August, the weighted average interest rate for interbank borrowing in the RMB money market was 1.77%, and the weighted average interest rate for pledged bond repurchase was 1.79%.

In August, the interbank RMB market had a total transaction volume of 181.78 trillion yuan through lending, bond trading, and repo, with an average daily transaction volume of 8.26 trillion yuan, a year-on-year decrease of 11.2%. Among them, interbank lending had a year-on-year decrease of 27.2%, bond trading had a year-on-year decrease of 1.6%, and collateralized repo had a year-on-year decrease of 12%.

In August, the weighted average interest rate for interbank lending was 1.77%, a decrease of 0.04 percentage points from the previous month and an increase of 0.06 percentage points from the same period last year. The weighted average interest rate for collateralized repo was 1.79%, a decrease of 0.03 percentage points from the previous month and an increase of 0.03 percentage points from the same period last year.

In August, the amount of cross-border RMB settlements under current account transactions was 1.26 trillion yuan, and the amount of cross-border RMB settlements under direct investment was 0.59 trillion yuan.

In August, the amount of cross-border RMB settlement under current accounts was 1.26 trillion yuan, with goods trade, services trade, and other current items accounting for 0.93 trillion yuan, 0.33 trillion yuan respectively. The amount of cross-border RMB settlement under direct investment was 0.59 trillion yuan, with foreign direct investment and foreign direct investment accounting for 0.2 trillion yuan and 0.39 trillion yuan respectively.