Authors: Zhong Zhengsheng and Chang Yixin (Zhong Zhengsheng is a director of the China Chief Economist Forum and the chief economist of Ping An).
Key takeaways
Matters: On February 8, 2024, the "Report on the Implementation of China's Monetary Policy for the Fourth Quarter of 2023" was released; On February 9, the central bank released a statistical report on financial data for January 2024.
In the fourth quarter of 2023 monetary policy implementation report, three issues are worth paying attention to:
1. How to grasp the new characteristics of money and credit? First,Look at the effect of falling interest rates. In the fourth quarter of 2023, the weighted average interest rate on new loans was 383%, a drop of 31bp in a single quarter, and the "cost reduction" intensity has increased significantly compared with the first three quarters. Second,Look more at the level of financial support in key areas. At the end of 2023, loans to high-tech enterprises, green loans, and inclusive small and micro loans increased year-on-year, respectively. 5% and 235%, which is higher than the growth rate of various loans in the same period. Third,Look at the scale of social financing that covers direct financing. In the first point of the report's "Main Policy Ideas for the Next Stage", it first mentions "maintaining a reasonable growth in financing and monetary aggregates", and explains that "financing" includes the two largest markets of bonds and credit, and the connotation of "stabilizing credit" has been expanded.
2. How to understand the "revitalization of the stock" of credit? On the one hand,The basic meaning of "revitalizing stocks" is that the credit structure has increased and decreased. Judging from the RMB loan data in January, bill financing hit a record low, and the "impulse" of banks with bills may decrease, which can also reflect the optimization of credit structure and the revitalization of stock. On the other hand,In the "Main Policy Ideas for the Next Stage" section of the report, "revitalizing stocks" also includes necessary market-oriented liquidation, debt restructuring and other means.
3. How do you view the trend of monetary policy? In terms of total volume, the report mostly follows the previous statement. We believe that there is room for MLF and LPR to be reduced by more than 20bp in 2024. Structurally,It is worth looking forward to the further implementation of PSL funds and the launch of re-lending tools for science and technology innovation and digital finance.
Financial data for January 2023 showed the following characteristics:
1. Social finance is supported by corporate bonds and off-balance sheet bill financing. In January 2024, the scale of social finance will be added to 65 trillion, a record high for the same period in history; The stock of social finance was flat at 9 year-on-year5%。From the sub-item:Undiscounted bills increased significantly, hitting a new high for the same period since 2018. Corporate bond financing increased year-on-year, as corporate bond financing was affected by the wave of wealth management redemption at the beginning of 2023 and had a low base. Larger-weighted renminbi credit and ** debt financing dragged down, both of which were weaker than the same period last year.
2. The structure of RMB loans tends to be balanced, and the quality has improved. New RMB loans in January increased slightly by RMB16.2 billion year-on-year. Structurally:The medium and long-term loans of enterprises fell slightly from the high, at the second lowest point in the same period in history, which is inseparable from the support of the concentrated start of infrastructure projects and the loan for the transformation of urban villages. Residents' medium- and long-term loans have recovered from their low levels, which deviates from the sales of the top 100 real estate companies, or may benefit from the decrease in residents' prepayment of loans. Bill financing hit a record low. In January, the new bill financing was -973.3 billion yuan, a record low, reflecting the policy orientation of "revitalizing the stock" of credit.
3. Currency**: 1) m1The year-on-year rebound exceeded expectations, and the dislocation of the Spring Festival was the leading factor, and the sustainability remains to be seen. Considering that the Spring Festival was earlier in the same period last year, the month-on-month growth rate of M1 was low, and at the end of January 24, it was more than a week before the Spring Festival, and wages and bonuses had not yet been paid in a centralized manner, the law of the Spring Festival can basically explain the "change" in the growth rate of M1 in January. Of course, the issuance of trillions of additional treasury bonds to projects also has some support for the growth rate of M1. 2）m2The year-on-year growth rate fell by 1 percentage point. In addition to the disturbance of the high base in the same period last year, the decline in credit growth and the slowdown in financial idling also dragged down.
On February 8, 2024, the "Report on China's Monetary Policy Implementation for the Fourth Quarter of 2023" was released; On February 9, the central bank released a statistical report on financial data for January 2024.
one
Three Concerns of the Monetary Policy Implementation Report
1. How to grasp the new characteristics of money and credit?
The first column of the report is "Accurately Grasping the Law and New Characteristics of Monetary and Credit Supply and Demand", and believes that "judging financial support cannot be 'only credit increment'", which explains the problem of "what to look at" for monetary credit.
First, "look more at the effect of falling interest rates". Judging from the data disclosed in the report, the "cost reduction" in the fourth quarter of 2023 has increased significantly compared with the first three quarters. In the fourth quarter of 2023, the weighted average interest rate on new loans was 383%, down 31bp in a single quarter, while the performance in the first three quarters was flat; The weighted average interest rate for general loans is 435%, down 16bp in a single quarter, and a total of 6bp in the first three quarters.
Second, "look more at the financial support in key areas such as scientific and technological innovation, green development, and micro, small and medium-sized enterprises". Combined with the "2023 Statistical Report on Loan Investment of Financial Institutions" released by the central bank on January 26, the balances of high-tech enterprise loans, green loans, and inclusive small and micro loans at the end of 2023 were 1364 trillion, 3008 trillion and 294 trillion, while the balance of various loans in the same period was 23759 trillion yuan; The three increased year-on-year respectively. 5% and 235%, both higher than 10 in the same period6% growth rate of various loans.
Third, "look more at the scale of social financing that covers direct financing". In the section of "Main Policy Ideas for the Next Stage" of the report, the first point is "to maintain a reasonable growth in financing and monetary aggregates". The concept of "financing and monetary aggregates" is mentioned here, and the 11 reports from the first quarter of 2021 to the third quarter of 2023 are all "money and credit" concepts. The statement immediately following the first point is also different from the past, proposing that "in accordance with the requirements of vigorously developing direct financing, we should reasonably grasp the relationship between the two largest financing markets, bonds and credit." continue to promote the development of the corporate credit bond and financial bond market", explaining that the concept of "financing" includes the two largest markets of bonds and credit, and expanding the connotation of "stable credit".
2. How to understand the "revitalization of the stock" of credit?
On the one hand, the basic connotation of "revitalizing stocks" lies in the increase and decrease of the credit structure. The 2023 ** Financial Work Conference deploys "revitalizing inefficient financial resources and improving the efficiency of capital use", and then the special column of the monetary policy implementation report in the third quarter of 2023 focuses on the issue of revitalizing the stock of funds, from the "increase" side (continue to strengthen the quality financial services for major strategies, key areas and weak links) and the "reduction" side (in the process of economic structural transformation and upgrading, there will naturally be replacement between different components, The relevant credit demand has also changed and adjusted) to explain the significance of revitalizing the stock of funds in terms of structural optimization. Judging from the RMB loan data in January 2024, bill financing has hit a record low, and the "impulse" of banks may decrease, which can also reflect the optimization of credit structure and the revitalization of stock.
On the other hand, "revitalizing stocks" also includes necessary market-oriented liquidation and debt restructuring. The "Main Policy Ideas for the Next Stage" section of the report mentions "supporting the adoption of debt restructuring and other means to revitalize the credit stock and improve the efficiency of the use of existing loans", "focusing on improving the efficiency of loan use, and providing better support for sustainable economic development by transferring some loans to more efficient business entities after maturity**, optimizing the investment direction of new loans, and promoting the necessary market-oriented liquidation".
3. How do you view the trend of monetary policy?
In terms of monetary policy aggregates, the report mostly follows the previous statement. We continue our previous view that there is room for MLF and LPR to be reduced by more than 20bp in 2024.
Structural monetary policy toolsIt is worth looking forward to the further implementation of PSL funds and the launch of re-lending tools for science and technology innovation and digital finance.
The central bank said in this report that it has increased the mortgage supplementary loan (PSL) quota by 500 billion yuan in December 2023, making it clear that PSL funds will support the construction of "three major projects". According to our incomplete statistics, as of the beginning of February, the credit line of CDB and ADBC for special loan projects for urban village renovation has reached more than 900 billion yuan, which may mean that there is still the possibility of further investment of PSL funds.
The central bank proposed a "plan to integrate tools to support technological innovation and digital finance". As of the fourth quarter of 2023, the RMB400 billion relending facility for scientific and technological innovation created by the PBOC in 2022 has expired, and the balance at the end of the year has fallen by RMB90 billion from the end of the third quarter of 2023 to RMB255.6 billion. On the basis of the previous tools, new support tools may be expected.
II. II. II
"Improving the quality" of social finance credit
1. Corporate bonds and off-balance sheet bills support social finance
In January 2024, the scale of social finance will be added to 65 trillion yuan, an increase of more than 500 billion yuan year-on-year, a record high for the same period in history; The year-on-year growth rate of social finance stock was flat at 95%。
In the new social financing, there was a significant increase in off-balance sheet undiscounted bills, corporate bond financing performed strongly from a low base, while RMB credit and ** debt financing, which were heavily weighted, were dragged down. Specifically, see:
One isThe performance of off-balance sheet bills was strong, hitting a new high in the same period since 2018, and the support for the growth rate of social finance increased by 007 percentage points.
The second is,Corporate bond financing increased year-on-year, but lower than the same period in 2022, because corporate bond financing was affected by the wave of wealth management redemption at the beginning of 2023 and the base was low; The support of corporate bond financing for the growth rate of social finance increased by 008 percentage points.
StillAs the main part of the RMB credit was slightly weaker than the same period last year, and the net financing of ** bonds, which had a strong performance in the previous period, also increased slightly year-on-year, and the growth rate of social finance decreased by 012 percentage points, a decrease of 009 percentage points.
2. The structure of RMB loans tends to be balanced
The total amount of new loans was stable, but the structure tended to be balanced and the quality improved. In January 2024, new RMB loans were added492 trillion yuan, a slight increase of 16.2 billion yuan year-on-year; The year-on-year growth rate of loan stock fell by 02 percentage points to 104%。From a structural point of view:
First, the medium and long-term loans of enterprises fell slightly from their high levels. In January 2024, about 33 trillion yuan, although a decrease from the same period last year, but at the second lowest point in the same period in history, it is inseparable from the support of infrastructure projects and urban village renovation loans. According to mysteel's incomplete statistics, the investment in major projects across the country in January was about 54,295$1.5 billion, lower than the same period last year, but higher than the same period from 2020 to 2022. On January 30, the Ministry of Housing and Urban-Rural Development issued a list of special loan projects for the reconstruction of urban villages, and the China Development Bank and the Agricultural Development Bank focused on granting credit and loans to relevant projects in the last two days of the month.
Second, residents' medium- and long-term loans have recovered from a low level. In January 2024, the new medium and long-term loans to residents were 627.2 billion yuan, an increase of more than 400 billion yuan compared with the low level of the same period last year, but lower than the same period from 2021 to 2022. The recovery of medium- and long-term loans to residents has diverged from real estate sales, or may have benefited from a decrease in prepayment of loans by residents. According to CRIC statistics, the sales amount of the top 100 real estate companies in January 2024 decreased by 34% year-on-year2%, a new low in recent years. On January 25, the State Administration of Financial Supervision said at a press conference that the scale of new issuance of personal housing loans in 2023 will be about 64 trillion yuan, the balance at the end of the year is 383 trillion yuan (about 05 trillion yuan). Assuming that the natural principal repayment scale of the mortgage is one-tenth of the balance, the prepayment scale of the mortgage is 3About 1 trillion yuan, the impact on residents' medium and long-term loans should not be underestimated.
Third, the financing of new bills hit a record low. In January 2024, the new bill financing was -973.3 billion yuan, a record low, reflecting the policy orientation of "revitalizing the stock" of credit.
3. The year-on-year growth rate of M1 rebounded more than expected
M1 rebounded more than expected year-on-year, with the dislocation of the Spring Festival as the dominant factor, and its sustainability remains to be seen. In January 2024, the year-on-year growth rate of M1 will be 59%, a sharp rebound from a record low.
In order to eliminate the dislocation disturbance of the Spring Festival, we ranked the month-on-month growth rate of M1 and M2 in January since 2011 in lunar order. We found that:In January, where the month-on-month growth rate of M1 is high, the lunar calendar on January 31 often corresponds to the period between the twentieth and twenty-second of the lunar month, or because it is not far from the Spring Festival, the salary and bonus are prepared to be paid, and the impact of the Spring Festival cash withdrawal has not yet been released; In January, where the month-on-month growth rate of M1 is low, the lunar calendar on January 31 often corresponds to the 29th day of the lunar month to the 10th day of the first lunar month.
Considering that the month-on-month growth rate of M1 in January 2023 is low, and January 31, 2024 is the 21st day of the lunar month, the law of the Spring Festival can basically explain the "abnormal movement" of the year-on-year and month-on-month growth rate of M1 in January 2024. Of course, the issuance of trillions of additional treasury bonds to projects also has some support for the growth rate of M1.
The year-on-year growth rate of M2 declined. In January 2024, the year-on-year growth rate of M2 was 87%, down 1 percentage point from the previous month. In addition to the disturbance of the high base in the same period last year, the stock of credit was revitalized (the growth rate of RMB loans in January fell by 02 percentage points), the slowdown in financial idling (deposits of non-financial enterprises increased by 457.4 billion yuan year-on-year in January) also had an impact.
Risk Warning:The implementation of the steady growth policy has not been as effective as expected, the overseas economic recession has exceeded expectations, and the credit risk of real estate enterprises has spread.