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Despite adjustments for seasonal factors, China’s two primary indicators of money supply and total social financing expanded at a faster rate in July compared to the previous month, largely driven by supportive monetary policies and an improved financing environment.
The broad measure of money supply, known as M2—which includes cash in circulation and all deposits—grew by 8.8 percent year-over-year to CNY 329.94 trillion (USD 46 trillion) by the end of July, up from 8.3 percent the month prior, according to data from the central bank.
Meanwhile, the narrower measure, M1, which encompasses cash in circulation and non-bank, non-government deposits, increased by 5.6 percent to CNY 111.06 trillion (USD 15.48 trillion). This growth was higher than June’s 4.6 percent increase, the data showed.
Total social financing reached CNY 431.26 trillion (USD 60.11 trillion) as of July 31, representing a 9 percent rise from the same period last year. The figure also grew by 8.9 percent in June and 8.7 percent in May.
New social financing added up to CNY 1.13 trillion (USD 157.5 billion) last month, marking an increase of CNY 361.3 billion (USD 50.3 billion) compared to the same period last year.
Economists highlight that China’s macroeconomic policies focus on coordinated efforts, leveraging both government and real economic forces to ensure smooth economic circulation and support credit demand growth.
From a longer-term viewpoint, consistent fiscal policy initiatives that fully harness the fiscal multiplier effect can enhance overall economic mobilization and progress, according to analysts.
The outstanding balance of yuan-denominated loans stood at CNY 268.51 trillion (USD 37.42 trillion) at the end of July, up 6.9 percent from the previous year, indicating stable support from credit to the real economy.
Experts predict that macroeconomic policies will aim for continuity and stability in the second half of the year, with particular emphasis on stabilizing employment, businesses, markets, and expectations. They also believe that ongoing economic recovery and reasonable growth in effective credit demand will receive strong backing.
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