20230712-招银国际-China_Policy_New_loans_picked_up_as_service_economy_continued_to_recover_8页_685kb

Summary of Report Analysis

The report, titled "China’s New Loans Pick Up amid Service Economy Recovery," published on 12 July 2023 by CMB International Global Markets' Equity Research, analyzes China's economic performance in June 2023. It highlights that new loans increased due to improvements in consumer credit and business operation loans, reflecting ongoing recovery in the service sector. However, overall social financing slowed to 9% year-on-year growth in June, down from 9.5% at the end of May, driven by weak off-balance-sheet financing, gov’t bond issuance, and slowing bond markets, which pressured infrastructure investment.

Household loans showed mixed results, with some types (e.g., short-term for consumption) recovering but others (e.g., mortgage-linked) slowing due to sluggish housing sales. Corporate loan growth improved briefly but remained fragile, with short-term loans rising as services recovered, but longer-term loans still constrained by cautious private business capital expenditure.

The report forecasts that policymakers, facing economic weakening and rising deflationary pressures, may intervene aggressively in the second half of 2023. This could involve cutting deposit rates and reducing reserve requirements to boost credit supply, while property policies might be relaxed with possible reductions in mortgage rates and down-payment ratios for homebuyers. Additionally, there could be increased credit and fiscal support for hard-technology and high-end manufacturing to stimulate growth.

Key data points include: social financing growth falling to 9% YoY in June, new real sector loans improving (6% YoY change), but household M&L term loans slowing to 11.1%. Figures indicate a fragile economic recovery with potential policy-driven boosts.

(Note: This summary is based on analyst Bingnan YE's work and acknowledges standard disclosures for investment risks and conflicts, as detailed in the report.)