Market News International:

Is the slowdown in credit growth and the increase in bond financing likely to become a long-term trend? If so, what implications will this have for the formulation and transmission of monetary policy? The next question is, what are the main reasons that the growth rate of M0 has remained relatively high recently? And finally, household loans declined year on year in May. What considerations does the People's Bank of China have regarding the repair and strengthening of household balance sheets? Thank you.

Zou Lan:

Thank you for your questions. I would like to invite Mr. Xie to answer your questions.

Xie Guangqi:

I will answer these questions. The growth rate of RMB loans slowed in the first half of this year, while bond financing, especially corporate bond financing, increased significantly. Net financing of corporate bonds reached 2.07 trillion yuan in the first half of the year, an increase of 916.7 billion yuan compared to the same period last year. We believe that the aforementioned changes in the financing structure are likely to be a long-term trend, reflecting both the profound adjustment of China's economic structure and the shift from old to new growth drivers, as well as the dynamic adaptation of the financial system and the continued deepening of financial supply-side structural reforms. In the future, money and credit supply will continue to shift from quantitative expansion to qualitative improvement, and slower credit growth with better quality may become one of the new norms in macroeconomic performance. This can be viewed from the following perspectives:

First, from the perspective of the economic development stage, as China's economy shifts from high-speed growth to high-quality development, the role of finance in serving the real economy is not only reflected in the continuous expansion of macro financial volume, but also in the improvement of its quality and efficiency. Currently, in sectors of technology finance, green finance, inclusive finance, pension finance, and digital finance, the proportion of new loans increased by more than 70%, and the interest rate for corporate loans dropped to around 3% -- a historically low level, which showed that the financial support for the real economy remains relatively solid.

Second, from the perspective of structural changes, it can be elaborated in two aspects: industrial structure and financing structure. In terms of industrial structure, the booming new quality productive forces have a lower reliance on bank loans. Traditional asset-heavy industries such as real estate and infrastructure are credit-intensive, but their growth is slowing. Loans in emerging sectors have to first fill the gap left by the decline in traditional fields before showing a net increase in total loans. In terms of financing structure, in earlier years, China's financing structure was dominated by bank loans, and the scale of the financial market was relatively small. But in recent years, as the financial market continues to flourish, financing channels have become more abundant and diversified. Financing methods such as bonds and stocks have correspondingly replaced and diverted bank loans in a positive way. In the total increment of social financing in 2025, the combined proportion of bond and stock financing reached 47%, surpassing that of loans for the first time, which accounted for 45%. This structural shift is reflected in the financial aggregate data, where the growth rate of total social financing and broad money supply outpace the growth rate of loans.

In addition, several other factors can also affect loan data. For example, in recent years, some of the loans have been replaced during the process of resolving local governments' hidden debts. Small and medium-sized financial institutions have written off a certain amount of loans to mitigate risks, which would affect the increase in loans. Banks have placed greater emphasis on the actual effect of granting loans to meet the financing needs of the real economy. Their proactive recall of loans, such as those involving "instant disbursement and instant repayment" or "deposit first, then loan," will also affect the year-on-year growth rate of loans at specific times.

In response to changes in economic and financing structures, the PBC is continuously improving the monetary policy framework, gradually shifting away from quantity-based intermediate targets, and transitioning the framework from being predominantly quantity-based to price-based, in a bid to create a favorable monetary and financial environment. A single loan indicator cannot fully mirror the financing situation of the real economy. We should combine loans and bonds for observation, and pay more attention to indicators that comprehensively reflect social financing conditions, including interest rates and financing structure.

Regarding M0 and household loans, M0 refers to the cash in circulation. Its growth rate is related to the payment habits of enterprises and residents, the transaction environment, as well as the demand for cash. A large proportion of household loans are mortgage loans. As residents actively and moderately deleverage, the interest payments and debts have decreased, resulting in dynamic changes of the household balance sheet. Thank you.