Overview of China’s Monetary Indicators
China’s economic and monetary landscape for January 2025 revealed both seasonal and structural dynamics. UOB Kay Hian’s detailed coverage highlights key financial indicators such as M1 and M2 money supply, new bank loans, and Total Social Financing (TSF). While some positive trends emerged, much of the activity appeared driven by seasonal factors, particularly ahead of the Chinese New Year festivities.
Liquidity Growth and Seasonal Trends
January 2025 saw M1 money supply growth turn positive at 0.4% year-on-year (yoy), marking a significant improvement from the -1.4% yoy contraction in December 2024. This unexpected rebound was attributed to stronger transactional demand for money during the festive season. However, M2 money supply growth moderated to 7.0% yoy, slightly below the Bloomberg consensus of 7.3% yoy, reflecting cautious liquidity conditions.
Banks issued an impressive RMB 5.13 trillion in new loans for January, far exceeding December’s RMB 1 trillion and beating market expectations of RMB 3.5 trillion. This surge was attributed to banks front-loading lending activities. Notably, RMB 3.5 trillion of these loans were directed towards corporate medium- to long-term loans, while new long-term household loans also rose to RMB 494 billion.
Key Monetary Indicators
| Indicator |
Jan 2025 (yoy % change) |
Consensus |
Dec 2024 |
Nov 2024 |
| M0 Money Supply |
17.2 |
– |
13.0 |
12.7 |
| M1 Money Supply |
0.4 |
-0.5 |
-1.4 |
-3.7 |
| M2 Money Supply |
7.0 |
7.3 |
7.3 |
7.1 |
| Outstanding Bank Loans |
7.5 |
– |
7.6 |
7.7 |
| Outstanding Total Social Financing |
8.0 |
– |
8.0 |
7.8 |
Total Social Financing (TSF): A Mixed Bag
New Total Social Financing (TSF) came in at RMB 7.1 trillion in January, more than doubling December’s RMB 2.9 trillion and exceeding consensus expectations of RMB 3.6 trillion. The primary driver was robust bank lending (+RMB 4.38 trillion), while government bond issuance declined from RMB 1.8 trillion in December to RMB 0.7 trillion as the financial year-end approached. Despite this uptick, outstanding TSF growth remained stable at 8.0% yoy, with outstanding loan growth edging slightly lower to 7.5% yoy.
Breakdown of Outstanding TSF Components
| Component |
Jan 2025 (yoy % change) |
Dec 2024 |
Nov 2024 |
2023 |
| Renminbi Loans |
7.2 |
7.2 |
7.4 |
10.4 |
| Forex Loans |
-29.4 |
-22.3 |
-21.5 |
-10.2 |
| Entrusted Loans |
0.4 |
-0.5 |
-0.5 |
0.2 |
| Trust Loans |
9.7 |
10.2 |
10.8 |
4.2 |
| Bank Acceptances |
-14.6 |
-13.3 |
-14.4 |
-6.7 |
| Corporate Bonds |
4.1 |
3.8 |
2.5 |
0.3 |
| Government Bonds |
16.7 |
16.2 |
15.2 |
16.0 |
| Equity Issuance |
2.6 |
2.5 |
2.6 |
7.5 |
Conclusion
While January’s monetary data showed some positive signs, including a rebound in M1 growth and robust new lending, the trends were largely influenced by seasonal factors. UOB Kay Hian remains cautious in interpreting these developments as indicative of a sustained recovery in credit demand. The moderation in M2 and outstanding loan growth further underscores this cautious outlook.
