As of the end of September, the social financing scale in China saw an 8% increase year-on-year, reflecting strengthened monetary policy support for the real economy. The People’s Bank of China recently released data showing that by the end of September, the balance of broad money (M2) stood at 309.48 trillion yuan, marking a 6.8% year-on-year growth—up 0.5 percentage points from the previous month, indicating a steady upward trend. In the first three quarters of this year, RMB loans increased by 16.02 trillion yuan, while the increment in social financing reached 25.66 trillion yuan.
Experts suggest that the recent package of incremental policy measures has boosted market confidence, particularly as funds have flowed back from wealth management products to deposits, supporting overall money supply growth. There’s a widespread expectation that the effects of these policies will become more pronounced, continuing to enhance the quality and effectiveness of financial support for the real economy’s high-quality development.
Financial indicators remain within a reasonable range. By the end of September, social financing in China grew by 8% year-on-year, and RMB loans rose by 8.1%. However, factors such as weak effective financing demand and structural economic adjustments have led to a slight decline in growth rates for September compared to the previous year. After adjusting for the high base effect, overall growth rates have remained stable.
Following the recent policy announcements aimed at stabilizing the stock market, there has been a positive reaction from the market, and expectations have improved. For instance, a staff member from a bank in Dongguan reported that over one-sixth of their listed company clients expressed interest in exploring financing options to enhance market capitalization management and improve operations.
In addition, various financial measures to support real estate have been announced, including lowering existing mortgage interest rates and standardizing down payment ratios. As a result, foot traffic and sales in real estate developments in major cities have shown signs of recovery, and requests for early mortgage repayments have decreased significantly, according to a calculation from a state-owned bank in Shenzhen which noted a 60% drop in daily early repayment applications since September 25 compared to earlier in the month.
The focus on key areas and weaknesses has intensified. Over recent years, as China’s economy undergoes structural transformation and upgrading, there has been a corresponding adjustment in credit structure. Demand for credit in traditional sectors, such as real estate and local financing platforms, has contracted, while financing for green development and technological innovation has seen rapid growth.
The growth of loans in key areas and weaker links serves as a vivid example of achieving the financial sector’s major objectives. By the end of September, inclusive micro-enterprise loans grew by 14.5% year-on-year, while medium-to-long-term loans for the manufacturing sector rose by 14.8%, and loans for specialized and innovative enterprises increased by 13.5%, all outpacing the overall loan growth.
Recently, during the World Manufacturing Conference, Wuhu United Aircraft Technology Co., Ltd. presented its TD550 co-axial unmanned helicopter among other products. The company’s representative stated that thanks to strong financial support, their “drone base and supporting infrastructure” project has reached 30% completion and is gradually becoming operational. A medical device company in Zhuhai managed to quickly upgrade its production facility valued at 30 million yuan with new equipment to resolve capacity constraints, thus paving the way for future market expansion and enhancing competitiveness.
Wang Qing, the chief macroeconomic analyst at Dongfang Jincheng, noted that with high-quality economic development and structural transformation, monetary policy is increasingly directed toward key sectors and vulnerabilities, activating low-efficiency financial resources and continuously optimizing the credit structure.
In recent years, the financial sector has introduced various structural policies to bolster strategic initiatives and support critical sectors and weaknesses. Pang Ming, the chief economist for JLL Greater China, asserted that these structural policies ultimately serve the real economy, addressing key bottlenecks in economic operations. Some policy tools aim to reverse specific market downward spirals, facilitating smoother economic cycles.
According to Zhou Maohua, a macro researcher at Everbright Bank’s Financial Markets Department, the central bank has repeatedly emphasized maintaining price stability and fostering a moderate recovery in prices as critical considerations for evaluating monetary policy, urging financial institutions to assess risks scientifically and regulate financing to overcapacity industries while targeting reasonable consumer financing needs. Furthermore, the goal is to leverage coordinated policy efforts to implement consumer-driven strategies and enhance supply-demand alignment. Overall, under the backdrop of economic restructuring, transformation, and a rapid shift between old and new growth drivers, monetary policy will work in conjunction with other macro policies to support high-quality economic development.
To bolster market confidence, the People’s Bank of China has implemented substantial monetary policy adjustments three times this year to support economic recovery. In late September, during a Politburo meeting, it was highlighted that there is a need to effectively implement existing policies while introducing additional measures aimed at enhancing the relevance and effectiveness of policy actions. In response, the central bank promptly rolled out a comprehensive set of incremental policies, including reducing the reserve requirement ratio and policy interest rates, lowering existing mortgage rates, and creating structural monetary policy tools to support the stability of the stock market.
“The underlying issue this year has been weak social expectations and insufficient confidence among business entities, which have been key constraints on economic recovery. The monetary policy is stepping ahead of the market, ramping up efforts to restore confidence,” stated Wen Bin, chief economist at China Minsheng Bank, noting that recent central bank policies reflect significant intensity, both in combination and individually.
This round of policy adjustments has targeted crucial areas, particularly the real estate and capital markets. Dong Ximiao, chief researcher at Zhongan Puhua, noted that the current adjustment in the real estate market is taking longer compared to previous cycles. The central bank is focusing on this sector by optimizing housing credit policies since May, establishing refinancing for affordable housing, and promoting inventory reductions in existing properties. In September, there was a further reduction in mortgage interest rates and the lowest down payment ratios, with some financial policy timelines extended. Early policy effects are becoming apparent, with the real estate market responding positively.
The stock market reflects the macroeconomy and serves as a barometer for market confidence. Recently, the central bank has also established two structural tools to support stable development in the stock market. This series of policies effectively bolstered market confidence.
