Matters:
In December 2021, China's social financing scale increased by 2.37 trillion yuan, new RMB loans increased by 1.13 trillion yuan, and M2 money supply increased by 9.0% year-on-year.
Ping An View:
Direct financing continues to drive the recovery of social finance. In December, the stock of social finance increased by 10.3% year-on-year, 0.2 percentage points higher than that of the previous month. The main drag factor on the growth of social finance in December was on balance sheet loans: the weak demand for loans was a big drag on the "wide credit". The supporting factors are mainly government bonds, corporate bonds and stock financing of non-financial enterprises. The pre issuance of local special bonds has a prominent pulling effect on social finance, and the net financing amount of urban investment bonds is also large. In addition, the transition period of new regulations on asset management is coming to an end, and the pressure drop of off balance sheet items has also slowed down.
The demand for loans from residents and enterprises is weak. In December, the loan stock increased by 11.6% year-on-year, 0.1 percentage point lower than that of the previous month. Among them, the medium and long-term loans and short-term loans of residents decreased together, and the lack of residents\' willingness to buy houses and short-term consumption restrained the demand for "leverage". The medium and long-term loans at the enterprise end are weak, and the year-on-year increase is due to the increase of bill financing and the decrease of short-term loans. The insufficient financing demand of the real economy still exists, and banks are still offsetting the credit line with the amount of bills.
The acceleration of fiscal expenditure led to a significant rebound in M1 and M2. In December 2021, the year-on-year growth rate of M2 increased by 0.5 percentage points to 9.0%. M1 increased by 0.5 percentage points year-on-year to 3.5%, improving for two consecutive months. In December, while the net financing of government bonds exceeded trillion, the Financial deposits also decreased by 1.03 trillion. While a large number of government bonds were issued, the financial expenditure increased significantly, which alleviated the shortage of cash flow in non-governmental departments to a certain extent, drove the year-on-year growth of M1 and M2 to rise together, and narrowed the difference between M2 and social financing growth by 0.3 percentage points. However, from the absolute level, the current absolute level of M1 growth is still low, and the cash flow of the enterprise sector is still dragged down by the downturn of real estate sales and off balance sheet non-standard pressure drop.
In general, the marginal improvement of social finance growth in December 2021 is mainly due to the "leverage" of government departments, but the problems of weak demand for effective loans by enterprises, poor Consumption Willingness of residents and weak sales of commercial housing have not been solved. We believe that monetary policy needs to take "multiple measures" to support the real economy (especially the weak links) and promote the further decline of loan interest rates, whether from stimulating the loan demand of residents and enterprises or reducing the pressure on interest repayment of the real economy. When the downward pressure on the economy is increasing, the possibility of directly adjusting the policy interest rate cannot be ruled out. Further monetary easing may be on the way: 1) the "inflation" factor is not a tight constraint on the central bank's monetary policy; 2) There is a possibility that China's monetary easing may be implemented in advance before the Federal Reserve increases interest rates; 3) Under the "front force" of finance, it is necessary for monetary policy to cooperate with the issuance of local bonds to alleviate the impact on short-term liquidity.
