According to the latest financial statistics released by the People's Bank of China, the cumulative increase in social financing scale for the first eight months of 2026 stood at 23.91 trillion yuan, a decrease of 2.64 trillion yuan compared to the same period last year. Among this, RMB loans extended to the real economy increased by 10.23 trillion yuan, a year-on-year decrease of 2.71 trillion yuan. By the end of August, the RMB loan balance was 282.35 trillion yuan, compared to 282.29 trillion yuan at the end of July, marking a net increase of 0.06 trillion yuan in August.
The research team of Wang Qing, Li Xiaofeng, and Feng Lin from Oriental Jincheng noted that the relatively small net increase in RMB loans in August reflects the ongoing adjustment in the urban investment and real estate sectors, which has dampened credit demand. Meanwhile, high-tech industries, which are growing rapidly, have a relatively lower dependence on credit financing.
August RMB Loans Increase by 60 Billion Yuan
The analysis by Wang Qing, Li Xiaofeng, and Feng Lin indicates that due to the significant year-on-year reduction, the year-on-year growth rate of various loan balances at the end of August slowed by 0.2 percentage points from the previous month to 4.9%, marking the lowest level on record. Looking at the breakdown, in the first eight months, corporate loans increased by 11.26 trillion yuan, with short-term loans rising by 4.18 trillion yuan and medium- and long-term loans increasing by 5.64 trillion yuan. In the first seven months, corporate loans had increased by 11.00 trillion yuan, with short-term loans up by 4.34 trillion yuan and medium- and long-term loans by 5.32 trillion yuan.
The research team pointed out that the persistently weak performance of corporate medium- and long-term loans aligns with the accelerated transition from old to new growth drivers. New growth drivers have lower financing density and rely less on credit funds compared to traditional sectors. Additionally, weak market demand has reduced corporate willingness to expand production, thereby weakening medium- and long-term loan demand. Furthermore, corporate medium- and long-term loans are also affected by several temporary factors: first, banks significantly increased credit support for corporate relief from 2020 to 2023, with a relatively high proportion of medium- and long-term loans, which are now reaching maturity this year; second, declining corporate bond issuance rates have driven a structural shift toward bond financing over loans; third, the limited deployment of policy-based financial instruments in August has constrained their catalytic effect on supporting loans.
Overall, the loan aggregate in August continued a trend of slowing growth with improved quality. The year-on-year reduction is primarily due to weakened corporate financing demand and continued deleveraging by households. However, the accelerated economic transformation is driving deep structural changes in the financing landscape. Loan growth alone can no longer fully capture the overall entity financing picture. Notably, loans directed toward the "five major financial articles" continue to grow robustly, providing strong support for the economy's structural upgrade.
Corporate Bond Net Financing Reaches 0.27 Trillion Yuan in August
Regarding social financing, Wen Bin, chief economist at China Minsheng Bank, pointed out that in the first eight months of this year, direct financing (including government bonds, corporate bonds, and equity financing) increased by 12.03 trillion yuan, accounting for 50.3% of total social financing. Direct financing has now significantly surpassed credit in proportion, nearly 20 percentage points higher than the same period five years ago.
In the first eight months, net financing from government bonds reached 8.77 trillion yuan, a decrease of 1.50 trillion yuan year-on-year. In the first seven months, government bond net financing was 7.76 trillion yuan, down 1.15 trillion yuan year-on-year. Data shows that in August alone, net government bond financing was 1.01 trillion yuan. Wen Bin noted that government bond financing accounted for over 60% of the month's total social financing. Against the backdrop of slowing investment growth and the need to consolidate domestic demand recovery, local governments accelerated bond issuance in August to channel funds into major projects promptly, aiming to translate into tangible work output and expand effective investment, thereby supporting the economy within a reasonable range.
Wen Bin stated that local government bond issuance reached 1.19 trillion yuan in August. Among this, new special bond issuance was 518.8 billion yuan, second only to June in scale, while new general bond issuance was 122.7 billion yuan, second only to February. Alongside the increased issuance volume, fund allocation from local bonds reflects a dual focus on stabilizing investment and addressing debt risks. For new special bonds, funds allocated to project construction account for over half of the total. This not only implements the requirements to accelerate fiscal expenditure and bond fund utilization but also reflects fiscal policy's aim to balance growth stabilization with risk prevention. As bond funds gradually take effect, their role in boosting infrastructure investment is expected to become more evident in the fourth quarter.
In the first eight months, net corporate bond financing was 2.79 trillion yuan, an increase of 1.23 trillion yuan year-on-year. In the first seven months, net corporate bond financing was 2.52 trillion yuan, up 1.10 trillion yuan year-on-year. Data shows that in August, net corporate bond financing was 0.27 trillion yuan. Wen Bin analyzed that corporate bond financing in August saw a year-on-year increase, accounting for 16% of the month's social financing. In a low-interest-rate environment, high-quality enterprises are increasingly issuing bonds to replace loans. Regulators have also explicitly proposed building a high-quality "technology board" in the bond market, utilizing risk-sharing tools for technology innovation and private enterprise bonds, and supporting more private tech companies and private equity investment institutions in bond financing.
Looking at cumulative data, Wen Bin noted that the issuance progress of general treasury bonds and local government bonds this year is lower than the same period last year, with both trailing last year's pace by the end of August. To stabilize investment and growth, the pace of government bond issuance and fiscal expenditure intensity will accelerate. Faster implementation of central budget funds and policy-based financial instruments to generate tangible work output is expected to further support social financing growth.
M2 Growth Slows by 0.2 Percentage Points at End of August
At the end of August, the broad money supply (M2) balance stood at 356.81 trillion yuan, up 7.5% year-on-year. At the end of July, the M2 balance was 355.51 trillion yuan, up 7.7% year-on-year. The year-on-year M2 growth rate at the end of August slowed by 0.2 percentage points from the previous month. The research team of Wang Qing, Li Xiaofeng, and Feng Lin attributed this primarily to the significantly reduced new loans in August, which amounted to only 60 billion yuan, dragging down deposit creation. Overall, M2 and outstanding social financing growth rates are currently running in the 7.0%-8.0% range, still significantly above the 5.4% nominal GDP growth rate in the first half of the year, indicating that social financing conditions remain relatively accommodative and monetary policy maintains a supportive stance.
The narrow money supply (M1) balance at the end of August was 115.77 trillion yuan, up 4.1% year-on-year. At the end of July, the M1 balance was 115.46 trillion yuan, up 4.0% year-on-year. The year-on-year M1 growth rate at the end of August accelerated slightly by 0.1 percentage points from the previous month. The research team explained that this is mainly due to the low base effect, as M1's month-on-month growth rate in August last year was 0.15%, significantly lower than the 1.1% average monthly growth rate over the past decade. This low base in August 2025 pushes up the year-on-year M1 growth rate for August this year. The current low M1 growth rate reflects subdued investment and consumption activity among enterprises and households amid weak domestic demand.
The "scissors gap" between M2 and M1 growth rates narrowed by 0.3 percentage points to 3.4 percentage points at the end of August, remaining at a relatively elevated level. The primary reason is that the ongoing adjustment in the real estate market has weakened investment and consumption momentum, resulting in low fund activation and impeded transmission from broad monetary easing to broad credit expansion. This implies that macro policies need to persist in boosting domestic demand, with stabilizing the real estate market being a critical priority.
Looking ahead, the research team of Wang Qing, Li Xiaofeng, and Feng Lin highlighted that the Political Bureau of the Central Committee has called for intensified counter-cyclical adjustments in the second half of the year, with comprehensive utilization and timely adjustment of monetary policy tools. This suggests room for further action in both aggregate and structural policy tools. Possible measures include: first, structural monetary policy tools could continue to cut rates, expand scale, and broaden scope, strengthening targeted support for technology financing and inclusive finance, facilitating the transition between old and new growth drivers, and enhancing the quality and efficiency of financial services to the real economy. Second, the central bank may seize opportunities to implement interest rate cuts and reserve requirement ratio reductions, with estimated rate cuts of 10 basis points and an RRR cut of 0.5 percentage points. This would be a key lever to promote consumption, stabilize investment, and boost domestic demand before year-end, with significant implications for stabilizing the real estate market. Considering the overall economic performance and price trends, these incremental policies are expected to be implemented around the end of the third quarter.