Financial Support Boosts High-Quality Real Economy Growth

The People's Bank of China recently released data showing that at the end of September, the balance of broad money (M2) was 309.48 trillion yuan, a year-on-year increase of 6.8%. The balance of narrow...

The People's Bank of China recently released data showing that at the end of September, the balance of broad money (M2) was 309.48 trillion yuan, a year-on-year increase of 6.8%. The balance of narrow money (M1) was 62.82 trillion yuan, a year-on-year decrease of 7.4%; the balance of currency in circulation (M0) was 12.18 trillion yuan, a year-on-year increase of 11.5%. In the first three quarters, net cash injections amounted to 838.6 billion yuan. In the first three quarters, RMB loans increased by 16.02 trillion yuan, the total increase in social financing scale for the first three quarters was 25.66 trillion yuan, and RMB deposits increased by 16.62 trillion yuan in the first nine months.

Industry insiders have stated that overall, the financial aggregate indicators in September remained stable, and the structure of credit continued to optimize. Against the backdrop of slowing domestic demand growth, monetary policy has intensified counter-cyclical adjustments, truly reflecting the "supportive" effectiveness and promoting the stable operation of the economy.

The total amount of money has maintained steady growth. Industry insiders believe that the stabilization and rebound of M2 growth rate is the result of the combined effects of various factors. The recent introduction and implementation of a package of incremental policies have provided clear support for the recovery of market confidence, especially the reflow of wealth management funds to deposits, which has supported the growth of the total amount of money.

"The reflow of wealth management funds to deposits, and the market confidence has also been repaired," said the aforementioned industry insiders. After the release of the package of incremental policy measures, the market's response to the two tools supporting the stable development of the stock market was enthusiastic, and market expectations improved. The inclusion of securities customer margin in M2 also contributed to the rebound of M2.

The growth rate of social financing scale and loans is generally stable. Data shows that the growth rate of social financing scale and loans has generally remained stable. Market experts analyze that last year's financial industry value-added calculation method was mainly based on the calculation method of deposit and loan growth rates. To promote regional economic growth, financial institutions were urged to increase loan disbursements, resulting in a high loan base. With the optimization and adjustment of the financial industry value-added calculation method, this phenomenon has significantly reduced this year.

Some industry insiders also reflected that with the implementation of the existing housing loan interest rate adjustment policy in September last year, the phenomenon of early loan repayment has decreased. Some banks have also returned the loans involved in the housing mortgage-backed securities (RMBS) issued earlier to the table. These factors have to some extent pushed up the loans at that time.

"Excluding the high base factor, the growth rate is generally stable, and the financial support for the real economy is also more stable and more substantial," said the aforementioned person.

The structure of credit is continuously optimized.At the end of September, the balance of inclusive small and micro loans was 32.90 trillion yuan, a year-on-year increase of 14.5%; at the end of September, the balance of medium and long-term loans in the manufacturing industry was 13.88 trillion yuan, a year-on-year increase of 14.8%; the balance of loans to "specialized, refined, and innovative" enterprises was 4.26 trillion yuan, a year-on-year increase of 13.5%.

Industry insiders have indicated that from the perspective of credit structure, credit resources in the first three quarters have been directed more towards key areas and weak links of the national economy. In recent years, as China's economic structure has undergone transformation and upgrading, the credit structure has also been adjusted accordingly. The overall credit demand in traditional areas such as real estate and local financing platforms has contracted, while new drivers such as green development and technological innovation have been rapidly forming. Although it is difficult to fill the gap in credit growth in the short term, efforts are being accelerated to close it.

"As a series of incremental policies recently introduced are gradually implemented, financial resources will increasingly flow towards major strategies, key areas, and weak links in the future. The financial support for the high-quality development of the real economy will have a brighter base color and more substantial quality," said the aforementioned industry insiders.

The core of structural policies still lies in the real economy. In recent years, the financial sector has introduced various structural policy measures to promote the supply-side structural reform of finance and optimize financial services. Industry insiders believe that structural policies are ultimately designed to serve the real economy, addressing key bottlenecks in its operation. Some policy tools will also promote the smooth circulation of the real economy by reversing the downward spiral feedback in specific markets.

Effective social demand will gradually recover.

While the credit structure continues to optimize, corporate financing costs are also decreasing, business confidence is recovering, and investment activities are improving.

Industry insiders have said that in the short term, insufficient effective financing demand and the "squeezing out of water" in financial data are important aspects; under the backdrop of asset quality control pressure and fear of being held accountable, some financial institutions have taken the absence of risk as the main criterion for evaluating performance, leading to a lack of flexibility in grassroots credit business and credit approval processes.

According to industry insiders, many financial institutions have already taken action. Some banks have increased the weight of credit indicators in key areas within their performance evaluation systems to stimulate the internal motivation of grassroots credit personnel. Some banks have held business promotion meetings to implement commendations and rewards. There are also banks that have expanded the scope of due diligence exemption for inclusive business, standardized the exemption process, and improved the efficiency of exemption.

From the perspective of monetary policy, authoritative experts have stated that judging from the People's Bank of China's public statements this year, the overall regulatory approach of monetary policy has changed in response to the changing situation. Overall, against the backdrop of accelerated economic structural adjustment, transformation and upgrading, and the conversion of old and new drivers, the future exploration of effective domestic demand, especially in promoting the expansion of consumer demand, will also be a joint effort of monetary policy and other macro policies to support the dynamic balance of supply and demand in the economy.

Some industry insiders also believe that with the continuous implementation of a series of incremental policies, effective social demand will gradually recover. The mechanisms for financial institutions to be willing and able to lend will be further improved. There is still a solid foundation for the stable growth of the total amount of finance, and the quality and efficiency of financial support for the high-quality development of the real economy will continue to be enhanced.