On April 13, the central bank released the latest data on finance and social financing. In the first quarter of this year, RMB loans increased by 9.78 trillion yuan, of which 3.64 trillion yuan was newly added in March. Preliminary statistics show that the cumulative increase in social financing for the first quarter was 15.18 trillion yuan, with a social financing scale increment of 5.89 trillion yuan in March, which was 1.06 trillion yuan more than the same period last year.

In the first quarter, the increment of social financing was at a relatively high level, especially in March, where the newly added Crediting exceeded market expectations. Industry experts analyze that as the financial system continued to increase the intensity of MMF issuance, more positive changes appeared in the funding demand side from enterprises and households, jointly promoting the rebound in loan growth rate in March.

Overall, the Crediting social financing data for the first quarter of 2025 has several prominent highlights:

Firstly, the increment of social financing remained at a high level, exceeding market expectations; in March, apart from loans, government Bonds also grew rapidly, which further boosted the growth rate of social financing.

Secondly, the structure of Crediting has further optimized, with effective demand continuously recovering. In particular, the newly added RMB loans for households in March performed well, with new medium and long-term loans centered on housing loans exceeding 500 billion yuan, reaching a relatively high level since early 2024, which is mainly related to the "small spring" for Real Estate markets in key cities; the recovery of effective Crediting demand from enterprises was also an important support factor for loans in March.

Thirdly, at the end of March, the narrow currency (M1), reflecting the degree of activation of social funds, grew by 1.6% year-on-year, which is 1.5 percentage points higher than the end of the previous month, and this is related to factors such as the recovery of business vitality.

The increment of social financing scale is at a historical high, and proactive fiscal measures play a key role.

In March, the incremental scale of social financing was 5.89 trillion yuan, at a historically high level for the same period.

Loans and government Bonds are the main factors supporting the scale of social financing. In March, government Bonds continued to accelerate issuance, with nearly 1.5 trillion yuan added in that month, which is nearly 1 trillion yuan more year-on-year, supporting the continued increase in the growth rate of social financing for the month. Data shows that the incremental social financing for the month increased by 1.06 trillion yuan year-on-year.

According to statistics from the Securities Times reporters, the net issuance scale of national Bonds in the first quarter exceeded 1.4 trillion yuan, while the issuance scale of local government Bonds exceeded 2.8 trillion yuan. Among them, the issuance scale of replacement Bonds used to swap out existing hidden debts was approximately 1.34 trillion yuan. Industry experts pointed out that the social financing scale indicators will not be affected by the special Bonds replacement loan factors, allowing for a more accurate measurement of the current financial support intensity. Currently, the growth rate of social financing has exceeded 8%, showing a steady upward trend.

Looking ahead, there is still a large issuance quota for local government Bonds and national Bonds, with 1.3 trillion yuan of ultra-long-term special national Bonds and 500 billion yuan of special national Bonds yet to be 'unleashed.' Feng Lin, executive director of the Research and Development Department of Dongfang Jincheng, stated in an interview with Securities Times reporters that considering a certain scale of fiscal expansion is needed in the second quarter to counter external pressures, there is a possibility that the supply scale of government Bonds may exceed expectations.

Experts indicate that the recent recovery in credit demand is mainly related to the proactive implementation of macro policies and more stable expectations. The synergistic effect of macro policies has significantly increased, with not only monetary policy clearly adopting a moderately loose stance but also more proactive fiscal policies playing a key role.

Especially since this year, the proactive fiscal policy has been implemented early, with government Bonds issuance and fiscal expenditure pace significantly accelerated, and major projects in many regions are also accelerating implementation, all of which ultimately reflect real demand from the entity economy, driving accelerated growth in Crediting. According to current calculations based on fiscal expenditure data, the national general public budget expenditure progress for January to February was 15.2%, higher than the average level for the same period in the past three years.

The effective Crediting demand from enterprises and residents is warming.

In March, new RMB loans amounted to 3.64 trillion yuan, with household loans and enterprise loans significantly rebounding compared to the previous month, showing a positive overall trend and structural improvement.

The recovery of effective credit demand in enterprises is an important supporting factor for loans in March. Whether the manufacturing Purchasing Managers' Index (PMI) remaining above the threshold for two consecutive months in March or the accelerated implementation of major projects this year will reflect in the credit market, manifesting as a recovery in effective financing demand. According to a national bank, the construction progress of key projects in the western region has significantly accelerated, leading to a corresponding increase in loan demand, with loans issued to local key projects cumulatively increasing by 67% year-on-year since the beginning of the year.

In March, new household loans increased by over 900 billion yuan compared to the previous month. The growth of medium and long-term loans for households remained rapid, mainly related to the arrival of a 'minor spring' in the real estate market in key cities. A branch of a state-owned major bank in the eastern region reported that the issuance of personal housing loans in March was roughly doubled compared to the same period last year, with a significant easing of early repayment situations.

In terms of credit interest rates, the weighted average interest rate for newly issued loans (in both foreign and domestic currency) to enterprises in March was about 3.3%, approximately 45 basis points lower than the same period last year; the weighted average interest rate for newly issued personal housing loans (in both foreign and domestic currency) was about 3.1%, approximately 60 basis points lower than the same period last year.

Global uncertainty deepens the impact on monetary policy, providing ample space for macro policies.

Recently, the US government announced the imposition of 'reciprocal tariffs,' causing turbulence in global financial markets. Industry experts indicate that the current world political and economic landscape is undergoing profound changes, increasing the impact of uncertainty. China’s macro policies still have space and capacity to dynamically adjust according to the needs of the situation and external influences, strengthening counter-cyclical adjustments.

Global economic uncertainty intensifies, bringing more challenges to the monetary policy decisions of central banks in various countries. The Federal Reserve's monetary policy meeting concluded that the economy faces high uncertainty, necessitating a pause in interest rate cuts. The European Central Bank believes that the trade war will have 'non-negligible' direct impacts on the economy. The Bank of Japan stated that it will adopt a cautious wait-and-see attitude, awaiting clearer direction on US tariff policies.

Industry experts noted that the relationship between money, inflation, growth, and employment is more complex than ever. The policy adjustments of central banks in major economies are increasingly data-dependent, making it difficult for macro control policies to follow the linear extrapolation of policies seen in the past. The drastic fluctuations in financial markets caused by tariff disputes, the intricate interplay with international situations, and the adjustments in economic policies of various countries present greater challenges for the formulation of monetary policy.

In the first quarter of this year, the scale of social financing, M2, and the growth rate of RMB loans continued to exceed the growth rate of nominal GDP, continuously optimizing the credit structure, reflecting the sustained recovery of effective credit demand. Analysis suggests that this is the fundamental driving force for financial support of the real economy and the source of resilience in credit growth, effectively promoting the rebound in monetary credit data over recent months.

April is traditionally a "small month" for Crediting. Combined with the intensified impact of current external shocks, industry insiders expect that the effective Crediting demand from some enterprises may decrease. However, there is still ample space in our macro policies to effectively respond to the uncertainties of the external environment and maintain reasonable growth in the domestic economy.

Editor/lambor