中国经济：流动性状况将保持宽松

China Economy Liquidity condition to remain easing FrankLiu(852) 3761 8957frankliu@cmbi.com.hk Social financing extended its recovery thanks to robust government bondissuance while M1 and M2 growth hit a recent high.However, Renminbi loansintheprivate sector continued to slow as housing demand andbusiness capexremained weak amid the persisted deflationary pressure. Looking forward, thePBOC will maintain easing liquidity condition with low money market rates tostimulatecredit demand,which is positive for Chinese stocks andcommodities. The central bank might cut RRR by 50bps and LPRs by 10bpsin 4Q25 when the YoY growth of housing sales and consumption is expectedto slow down due to high base and diminishing policy effects. US$/RMB mightmildly rise in August and September as US inflation is expected to reboundwhile China’sdeflation may deteriorate. US$/RMB may drop again in 4Q25when US inflation might decline again and China might launch additional fiscalstimulus towards consumption. We expect US$/RMB to reach 7.10 at end-2025. Bingnan YE, Ph.D(852) 3761 8967yebingnan@cmbi.com.hk Social financingcontinued to recover.Outstanding social financing (SF)edged up to9% inJuly from 8.9%(all in YoY terms unless otherwisespecified),whiletheSF flowexpanded by 50.5% to RMB1.16trn,which fellshort ofmarket expectationofRMB1.41trn.Government bondissuanceremainedrobust,rising 80.8%to RMB1.24trn in July compared toRMB1.35trn in June. The issuance pace was running ahead of the averagepace to meet thefull-yeartarget of RMB13.9trn incremental debt quota,indicating thatthe fiscal support in 2H25 would be more stable andmoderate compared to last year.Corporate bond issuancealso remainedstrong, rising 37% to RMB279bn in July compared to RMB242bn in June.RMB loansto the real economyunder SFdropped to negative flow at-RMB426bn in July compared to–RMB80.8bn last year, as LGFVs debtswap continued.M1 supplyrose to 5.6% in July from 4.6%, the highestgrowth since early 2023, whileM2rose to 8.8%from 8.3%. Source: Wind, CMBIGM NewRMBloansremained subdued.Growth of outstanding RMB loansedged down to6.9%inJulyfrom7.1%,marking another historical low,asthenewRMB loansnotablyslumpedto–RMB50bninJuly compared toRMB260bn in previous year. Credit demand of household sector remainedlethargic as both short-term and medium & long-termsaw negative loanflows at–RMB382bn and–RMB110bn in July. ST loans to household hasnotably decreased by RMB383bn YTD asconsumerswere reluctant tospend. M&Lloanflowshavedropped 10.9% YTD as the property sectorcontinued to soften, especially after June. Corporate sector also sawnegative flows of–RMB550bn and-RMB260bn in ST and M&L loans, withtheir YTD growth at 47% and-16% in July.Bill financing increased by55.9% to RMB871bn in July, reflecting possible idle funds circulation andlack of incentive for long-term capital investment. Source: Wind, CMBIGM Theeasing liquidity condition should support Chinese stocks andcommodities.As the deflationary pressure persists with downsidepressure on the economy, the PBOC will maintain easing liquidity conditionto stimulate credit demand. The easing liquidity condition should supportChinese stocks and commodities.The central bank might cut RRR by50bps and LPRs by 10bps in 4Q25 when the YoY growth of housing salesandconsumption is expected to slow down due to high base anddiminishing policy effects.US$/RMB might mildly rise in August andSeptember as US inflation isexpected to rebound while China’sdeflationmay deteriorate. US$/RMB may drop again in 4Q25 when US inflationmight decline again and China might launch additional fiscal stimulustowards consumption. We expect US$/RMB to reach 7.10 at end-2025. Source: Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:MoF, CMBIGM Source:MoF, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwith respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related tothe specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the st