Government Leverage Boosts Social Financing Growth as Loan Expansion Slows Amid Economic Transition

Deep News12-12

China's central bank released its November 2025 financial statistics report on December 12, showing continued substitution effects of accelerated government bond issuance on traditional loans.

Key data highlights: - Outstanding aggregate financing to the real economy reached 440.07 trillion yuan by end-November, up 8.5% YoY * RMB loans to real economy: 267.42 trillion yuan (+6.3% YoY) * Corporate bonds: 34.08 trillion yuan (+5.6% YoY) * Government bonds: 94.24 trillion yuan (+18.8% YoY)

Structural changes: - RMB loans' share dropped 1.3 percentage points YoY to 60.8% - Government bonds' share rose 1.8 percentage points to 21.4%

Year-to-date performance: - Cumulative new social financing reached 33.39 trillion yuan, 3.99 trillion yuan more than 2024 * RMB loans: +14.93 trillion yuan (1.28 trillion yuan less than 2024) * Government bond financing: +13.15 trillion yuan (3.61 trillion yuan more than 2024)

Experts note that government leverage expansion has become crucial for maintaining credit growth, with bond financing now accounting for 40% of new social financing. This includes completion of: - 1.3 trillion yuan ultra-long special treasury bonds - 2 trillion yuan special refinancing bonds for local debt resolution - 4.4 trillion yuan new special bonds for projects

Credit market dynamics: - M2 growth remained stable at 8% YoY (336.99 trillion yuan) - Corporate and household loan growth slowed to 6.3% (274.84 trillion yuan) * Micro/small business loans grew faster at 11.4% * Manufacturing medium/long-term loans rose 7.7%

The slowdown reflects China's economic transition: - Reduced demand from traditional sectors (infrastructure, real estate) - New growth drivers (tech innovation) relying more on equity than debt financing - Consumer-driven growth requiring less credit support

Policy outlook: - PBOC maintains accommodative stance with average corporate loan rates at 3.1% - Focus shifts to comprehensive indicators beyond loan growth - Structural tools to target key areas (tech innovation, SMEs, domestic demand)

Monetary framework enhancements include: - Multi-layered liquidity management system - Improved interest rate transmission mechanism - Coordinated use of conventional and innovative tools (including bond market operations)

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