Main points
Credit and money growth rebounded faster than expected
We previously pointed out that the decline in new credit and monetary growth in February was mainly seasonal and did not have a trend. The pattern of stable and loose liquidity environment in China will not change. In March, both new credit and monetary growth showed a rebound that exceeded market expectations.
Credit and monetary growth rebounded in place
As China's monetary system has turned to endogenous structure, the stability of the economy determines the stability of credit and monetary growth; Therefore, we have always believed that the steady trend of credit and monetary growth remains unchanged during the period of hovering at the bottom of the economy. On the other hand, from the perspective of monetary policy, neutral and prudent monetary policy is also a policy preference, which has been expressed by the monetary authorities for many times.
Balanced development of credit growth term
Unlike the previous new credit mainly focused on medium and long-term loans, the current credit growth period is relatively balanced. The equal development of credit term usually means that the economy goes out of the bottom and begins to recover. However, the current development of equalization of credit terms or the development of structural adjustment policies that give priority to the financing of entities and small and medium-sized enterprises.
The growth trend of social financing is within the table, and the financing development is orderly
From the perspective of social financing structure, the trend of financing table internalization has been obvious since 2022. Since 2018, the construction of capital market standardization system marked by the implementation of new asset management regulations has gradually achieved results, and the orderly and planned development of social financing means that the improvement of social credit system and the stability of liquidity environment tend to be stable.
Monetary policy has entered the observation period, and the "double drop" will be postponed
The pattern of "excessive stock and insufficient increment" in China's monetary environment has not changed. From the trend, there is still an internal demand for "double reduction" (interest rate and reserve requirement reduction) in China's currency during the year. However, due to the rising pressure of commodity prices caused by geopolitical impact in the short term, the timing of policy introduction may be delayed. The actual situation of inflation in March strengthened the market expectation of the continuation of high prices. As the economy is facing a downturn, it is difficult for prices to fall, which restricts the adjustment of monetary policy interest rates. In addition, with the increase of overseas interest rates, the reduction of reserve requirements and interest rates will be delayed, and the liquidity may be tightened in the short term.
Risk tips
The conflict between Russia and Ukraine has expanded, China's inflation has risen higher than expected, the international financial situation has changed, and China's monetary policy has changed more than expected.
