The "Financial Statistics Report for July 2026" recently released by the People's Bank of China shows that at the end of July, the stock of social financing and the growth rate of broad money (M2) were significantly higher than the nominal GDP growth rate in the first half of the year, and the conditions for social financing were relatively loose. Monetary policy continued to maintain a supportive stance. Industry experts generally believe that monetary policy is expected to work together in terms of both aggregate and structural tools, introducing more incremental policies to provide stronger support for the stable and positive development of the economy.
Specifically, as of the end of July, the stock of social financing reached 463.27 trillion yuan, a year-on-year increase of 7.4%. Among them, the balance of corporate bonds was 36.47 trillion yuan, a year-on-year increase of 9.2%, and the balance of government bonds was 102.68 trillion yuan, a year-on-year increase of 14.1%. The M2 balance was 355.51 trillion yuan, a year-on-year increase of 7.7%. At the end of the month, the balance of RMB loans was 282.29 trillion yuan, a year-on-year increase of 5.1%.
Driven by the year-on-year increase in sub items such as corporate bond financing and government bond financing, social financing resumed year-on-year growth again in July after a four month hiatus, supporting the year-on-year growth rate of social financing stock at the end of the month to be the same as that at the end of last month, ending the previous four months of continuous decline. Overall, the current M2 and stock social financing growth rates are significantly higher than the nominal GDP growth rate in the first half of the year, indicating that the current social financing conditions are in a relatively loose state, and monetary policy maintains a supportive stance. ”Wang Qing, Chief Macro Analyst of Dongfang Jincheng, said.
However, industry experts also mentioned that in July, RMB loans continued to be in the process of "slowing down and improving quality" mainly due to factors such as weakened financing demand from enterprises and continuous deleveraging by residential sectors.
At present, loan interest rates are showing a downward trend, indicating that loan disbursement has been relatively sufficient under the influence of supply and demand. The decline in loan growth rate is somewhat related to changes in financing methods of enterprises and other operating entities. Among the existing social financing scale, the growth rate of bond financing is significantly higher. The comprehensive scale of social financing reflects the financing support obtained by the real economy from the financial sector, and its stable growth rate indicates that the financial support for the real economy is sufficient, "said Lou Feipeng, a researcher at China Postal Savings Bank.
Wang Qing believes that overall, the total amount of new credit added in July is still relatively weak, and the "speed reduction and quality improvement" of loans is becoming the new normal. Structurally, the current banking system is adapting to the trend of economic transformation and optimizing credit allocation. Data shows that at the end of July, the growth rate of loans for inclusive small and micro finance and other financial "five major articles" was significantly higher than the growth rate of all loans. The weighted average interest rate of newly issued loans in the same month dropped to a historical low. The current credit allocation structure is optimized, and the quality and efficiency of serving the real economy are improved.
Faced with new changes in the domestic and international economic and financial situation, industry insiders believe that the central bank is expected to introduce more incremental measures.
The "Report on the Implementation of China's Monetary Policy for the Second Quarter of 2026" (hereinafter referred to as the "Report") recently released by the People's Bank of China proposes that in the next stage, the effectiveness of various existing policies will be fully utilized, practical and effective incremental policies for Taiwan will be timely formulated, countercyclical adjustment efforts will be increased, domestic demand will be expanded, supply will be optimized, and the economy will continue to develop towards a new and better direction.
At the same time, the report also calls for the dual functions of the total amount and structure of monetary policy tools, the implementation of a series of monetary and financial policies introduced at the beginning of the year, continuous improvement of tool design and management, solid implementation of the "five major articles" in finance, and strengthening financial support for key areas such as expanding domestic demand, technological innovation, and small and medium-sized enterprises.
According to Tian Lihui, a finance professor at Nankai University, based on the statements in the second quarter monetary policy implementation report, it is expected that the central bank's policy focus will shift more towards revitalizing existing assets, innovating structural tools, and supporting fiscal efforts.
It is expected that structural monetary policy tools will continue to lower prices, increase increments, and expand coverage, increase targeted support for technology financing and inclusive finance, promote the transformation of old and new driving forces, and improve the quality and efficiency of financial services for the real economy. Taking into account the overall economic operation situation and price trends, it is expected that the above incremental policies may be implemented around the end of the third quarter. It is worth noting that the issuance of government bonds will significantly accelerate in the second half of the year, and the promotion of 800 billion yuan of new policy financial instruments will be accelerated. This will drive the recovery of government bond financing to increase year-on-year and stimulate the supply of supporting loans. Therefore, social finance is expected to recover to increase year-on-year in the second half of the year, "said Wang Qing. (Looking into the New Era)