Donghai Futures analyst Ming Daoyu presents the key data points and main perspectives.
Key data and event highlights:
On January 15, 2026, the central bank held a press conference. The People's Bank of China introduced eight structural monetary policy measures, emphasizing coordination with fiscal policies such as fiscal subsidies, guarantees, and risk-sharing during implementation. Through multiple measures including lowering interest rates on structural monetary policy tools, expanding relending quotas, and optimizing the structure of policy tools, it is further increasing targeted support for the real economy, aiming to create a loose and suitable monetary and financial environment for stable economic growth and structural transformation. New RMB loans in December reached 910 billion yuan, surpassing the expected 800 billion yuan and up from the previous 390 billion yuan. The increment in social financing scale for December was 2.2075 trillion yuan, exceeding the expected 1.9 trillion yuan but lower than the previous 2.4926 trillion yuan, representing a year-on-year decrease of 646.2 billion yuan. By the end of December, the outstanding social financing stock stood at 442.12 trillion yuan, growing 8.3% year-on-year, a slight 0.2% decline from the previous month. M2 money supply grew 8.5% year-on-year in December, beating the 8.0% expectation and the previous 8.0% reading, marking a 0.5% increase from the prior month.
Main Perspectives:
New RMB loans in December amounted to 910 billion yuan, exceeding the 800 billion yuan forecast and rising from the prior 390 billion yuan. The new social financing aggregate reached 2.2075 trillion yuan, higher than the anticipated 1.9 trillion yuan but lower than the previous 2.4926 trillion yuan. M2 growth accelerated to 8.5% year-on-year, surpassing the 8.0% forecast and the previous 8.0%. China's December M2 increased significantly and exceeded expectations, primarily driven by a substantial rise in non-bank deposits; overall M2 remains at a reasonable level, indicating continued accommodative monetary policy. While new aggregate social financing declined year-on-year, it still beat expectations, mainly due to increased corporate financing offset by a sharp drop in government financing demand, suggesting the transmission from loose money to loose credit is ongoing. With reduced external risks, some improvement in the domestic economy, and strengthened support from the central bank's structural policies, further RRR and interest rate cuts are anticipated within the year, with monetary policy expected to remain appropriately accommodative and liquidity ample. Regarding credit expansion, domestic economic growth is improving. As policy-based financial instruments, local government special bond quota allocations are completed, and with additional support from the central bank's latest structural financial tools, the boosting effect on social financing is likely to become more apparent, potentially accelerating the pace of monetary policy transmission to credit. For the markets, the financial data indicates an overall improvement in domestic demand, which is a short-term positive for domestic risk assets and the Renminbi exchange rate. Medium to long-term, as policy support tools are fully deployed and gradually take effect, the credit expansion process is expected to accelerate further, fostering improved economic growth.
Risk factors: Intensified China-US tensions, domestic stimulus policies falling short of expectations, and liquidity tightening exceeding expectations.
Analysis of the Central Bank Press Conference Policy: On January 15, 2026, the central bank held a press conference. The People's Bank of China introduced eight structural monetary policy measures, emphasizing coordination with fiscal policies such as fiscal subsidies, guarantees, and risk-sharing during implementation. Through multiple measures including lowering interest rates on structural monetary policy tools, expanding relending quotas, and optimizing the structure of policy tools, it is further increasing targeted support for the real economy, aiming to create a loose and suitable monetary and financial environment for stable economic growth and structural transformation. First, the central bank introduced eight monetary policy measures, primarily focusing on structural monetary policy tools, with an emphasis on supporting domestic demand expansion and increasing targeted support for the real economy. These measures specifically target financing needs in technological innovation, small and micro-enterprises, small and medium-sized private enterprises, green initiatives, and agriculture-related sectors. Key actions include: 1) Reducing interest rates on various structural monetary policy tools like relending and rediscounting by 0.25 percentage points. Post-adjustment, interest rates for 3-month, 6-month, and 1-year relending supporting agriculture and small businesses are lowered to 0.95%, 1.15%, and 1.25% respectively; the rediscount rate is cut to 1.5%; the Pledged Supplementary Lending (PSL) rate is reduced to 1.75%; and rates for special structural monetary policy tools are unified at 1.25%. With the outstanding balance of structural monetary policy tools reaching 5.4 trillion yuan by the end of 2025, this move is expected to save banks approximately 13.5 billion yuan in costs, helping reduce financial institutions' funding costs, stabilize bank net interest margins, enhance credit support capabilities for key areas and weak links, and create some room for potential interest rate cuts. 2) Increasing support for technological innovation. The quota for relending supporting technological innovation and technological transformation will be increased by 400 billion yuan, expanding from the original 800 billion yuan to 1.2 trillion yuan. Starting in 2026, the policy support scope will be further broadened to formally include private small and medium-sized enterprises with high R&D investment levels. 3) Strengthening financial support for small and medium-sized private enterprises. Quotas for relending supporting agriculture/small businesses and rediscounting will be merged, with an additional 500 billion yuan allocated specifically for small and medium-sized private enterprise relending within the total quota, amounting to 1 trillion yuan, primarily directed towards these entities. This enhances policy flexibility and fund deployment efficiency, further alleviating financing difficulties and high costs for small and medium-sized private enterprises. 4) Continued efforts with the carbon reduction support tool. Projects with direct carbon reduction effects, such as energy-saving renovations, green upgrades, and energy green/low-carbon transition, will be included in its scope. This tool operates quarterly, providing 1-year relending funds each time, with an annual operational volume not exceeding 800 billion yuan, adjusted dynamically based on monetary policy needs and actual fund deployment by financial institutions. 5) Lowering the down payment ratio for commercial properties. Given the current downturn in commercial real estate, characterized by falling rents and rising vacancy rates, further policy support is needed. The central bank has reduced the minimum down payment ratio for commercial property loans to 30% to better support reasonable financing demand and promote stable operation of the real estate market. Second, signaling monetary easing, with RRR and interest rate cuts likely in 2026. The central bank explicitly stated that "there is still some room for RRR and interest rate cuts this year." The average statutory deposit reserve ratio for financial institutions is currently 6.3%, leaving room for reduction. Furthermore, proactive fiscal policy requires support from loose liquidity; with fiscal policy front-loaded, the central bank might act in the first quarter. Regarding interest rate cuts, externally, the Fed is generally in a rate-cutting cycle, and the US dollar continues to weaken. Internally, the Renminbi exchange rate has been appreciating, bank net interest margins show signs of stabilization, and coupled with upcoming maturities of large long-term deposits, the recent rate cuts on structural tools also help reduce bank interest payment costs, creating conditions for further rate cuts. Third, the central bank emphasized that buying and selling government bonds is an important pathway for monetary and fiscal policy coordination, indicating such operations will become more flexible. It outlined three key considerations: Firstly, government bond transactions are one method for injecting base money, with outright repos primarily conducted through buying/selling government bonds. Secondly, to stabilize bond market supply and demand and enhance market liquidity for government bonds, the central bank disclosed that its outstanding government and local government bonds via outright repos reached nearly 7 trillion yuan in 2025. Through flexible bond operations coordinated with other liquidity tools, it aims to maintain ample liquidity, creating a favorable environment for smooth government bond issuance. Finally, to ensure stable bond market operation and maintain a normal upward-sloping yield curve. This implies that the scale of central bank government bond operations in 2026 will depend mainly on government bond issuance schedules and the shape/level of the treasury yield curve. Fourth, maintaining the basic stability of the Renminbi exchange rate at a reasonable and balanced level. By the end of 2025, the Renminbi appreciated past 7 against the US dollar, driven by dollar weakness and market forces. However, the external situation remains complex and severe, with uncertainty regarding the magnitude and pace of interest rate adjustments in major economies and potential persistent geopolitical shocks that could cause exchange rate fluctuations. The Renminbi exchange rate is expected to continue two-way fluctuations with flexibility. The central bank's exchange rate policy remains focused on preventing overshooting risks and keeping the Renminbi fundamentally stable at a reasonable equilibrium level. China has no need or intention to gain trade advantages through currency depreciation; moreover, the long-term positive domestic macroeconomic outlook supports the Renminbi's basic stability.
Analysis of December 2025 Financial Data: (I) Corporate Credit Improves Significantly, Household Loans Remain Weak
New RMB loans in December were 910 billion yuan, exceeding the 800 billion yuan expectation and rising from the previous 390 billion yuan, but still 80 billion yuan lower than the same period last year. New credit in December was lower year-on-year but beat market expectations, primarily due to a sharp decline in household sector loans. New household loans in December were -91.6 billion yuan, a significant 441.6 billion yuan drop compared to the previous year. Specifically, new household short-term loans were -102.3 billion yuan, down 161.1 billion yuan year-on-year; despite subsidies for consumer loans, the decline suggests weak income expectations and the fading impact of trade-in policies. New household medium- and long-term loans were -10.0 billion yuan, down 290 billion yuan year-on-year, mainly due to weak home-buying demand and factors like early repayments. In contrast, new corporate loans surged to 1.07 trillion yuan, an increase of 580 billion yuan year-on-year. Within this, short-term corporate loans were 370 billion yuan, up 370 billion yuan year-on-year, indicating relatively convenient year-end corporate credit financing. Medium- and long-term corporate loans were 330 billion yuan, up 290 billion yuan year-on-year, potentially linked to the implementation of new policy-based financial tools, the utilization of leftover local government bond quotas, and the early issuance of the 2026 government investment plan. New bill financing was 350 billion yuan, down 100 billion yuan year-on-year, reflecting reduced bank demand to use bills to boost volumes as short-term corporate credit financing improved.
(II) Government Financing Declines Sharply, but New Social Financing Beats Expectations
The increment in social financing scale for December was 2.2075 trillion yuan, higher than the 1.9 trillion yuan expectation but lower than the previous 2.4926 trillion yuan, representing a year-on-year decrease of 646.2 billion yuan, yet still exceeding market forecasts. By the end of December, the outstanding social financing stock was 442.12 trillion yuan, growing 8.3% year-on-year, a slight 0.2% decline from the previous month, indicating the ongoing transmission from loose money to loose credit. Analyzing the structure of new social financing: credit financing demand from the real economy decreased year-on-year, with declines in both household and corporate credit, while corporate bond financing rose, government bond issuance slowed significantly, and the decline in non-standard financing demand moderated. New credit in December was 980.4 billion yuan, up 140 billion yuan year-on-year, primarily related to a substantial increase in corporate sector credit financing demand. Non-standard assets, including trust loans, entrusted loans, and undiscounted bankers' acceptances, collectively decreased by 50.5 billion yuan, a lesser decline of 69.4 billion yuan year-on-year, indicating overall weak non-standard financing demand. Corporate bond financing increased by 154.1 billion yuan, up 170 billion yuan year-on-year, possibly reflecting continued encouragement for issuing sci-tech innovation bonds. Net government bond financing was 683.3 billion yuan, a significant decrease of 1.0733 trillion yuan year-on-year due to a high base effect, as government bond issuance was more back-loaded in 2024 compared to a more front-loaded pattern in 2025. Overall, financing demand from the real economy decreased year-on-year, mainly due to declines in household and government sector demand. In the short term, with fiscal policy front-loaded and the utilization of last year's government special bond quotas, government financing demand may remain relatively high. For the corporate sector, medium to long-term, with support from structural monetary policy tools and the full deployment of new policy-based financial instruments, the boosting effect on social financing should become more evident, and subsequent financing demand is expected to gradually improve. Household sector financing demand, amid recent nationwide housing price adjustments and weak property demand, will continue to constrain household loan growth. Therefore, although current social financing demand has slightly declined year-on-year in the short term, primarily due to reduced government financing demand, medium to long-term, with persistently accommodative domestic monetary policy and the January implementation of new structural monetary policy tools, the positive impact on social financing is likely to materialize further, potentially accelerating the credit expansion process.
(III) Surge in Non-Bank Deposits Drives Significant M2 Rebound
M2 money supply grew 8.5% year-on-year in December, surpassing the 8.0% expectation and the previous 8.0% reading, with the growth rate 0.5 percentage points higher than the end of the previous month and 1.2 percentage points higher than the same period last year. This was mainly driven by a substantial increase of 2.84 trillion yuan in non-bank deposits and a rise of 390 billion yuan in household sector deposits, while corporate deposits decreased by 585.7 billion yuan, possibly reflecting corporate savings flowing into assets like stocks and fund products. The money supply overall maintained reasonable growth. M1 growth was 3.8% year-on-year, slightly below the 3.9% expectation and down from the previous 4.9%, a decrease of 1.1 percentage points from the previous month; this partly reflects a significant base effect from the same period last year and the decline in corporate deposits. Additionally, the year-on-year decline in the December PPI narrowed to 1.9% from 2.2% in September, potentially leading to marginal improvement in corporate profits. Simultaneously, an increase in the export settlement ratio and local government debt repayments also helped improve corporate sector cash flow. M0 growth was 10.2%, down 0.4%, indicating overall ample short-term money supply from the central bank. The decline in M1 alongside the significant rebound in M2 suggests current fund supply remains stable, with increased base money supply, maintaining reasonable levels and continued accommodative monetary policy. Given improving domestic economic growth and reduced external risks, monetary policy remains appropriately accommodative. Furthermore, with accelerated debt resolution, front-loaded fiscal policy, and the deployment of policy-based financial tools and structural monetary policy instruments, credit derivative demand is recovering, and M2 is expected to maintain a relatively high growth rate in the short term.
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