The People's Bank of China released financial data for February on March 14. According to the data, at the end of February 2025, the balance of broad money (M2) was 320.52 trillion yuan, a year-on-year increase of 7.0%; In the first two months, RMB loans increased by 6.14 trillion yuan, and at the end of February, the stock of social financing was 417.29 trillion yuan, a year-on-year increase of 8.2 percent. In the first two months, the cumulative increase in the scale of social financing was 9.29 trillion yuan, 1.32 trillion yuan more than the same period last year.

Jingtai believes that there is still plenty of room for moderately loose monetary policy in the future, but how to face the uncertainty of the internal and external macro situation, key information, Jingtai will interpret for you.

The scale of social financing has maintained rapid growth

The rapid growth of the scale of social financing in February reflects the dual favorable policy support and market environment. According to the data, the year-on-year growth rate of social financing scale and stock at the end of February was 0.2 percentage points faster than that of the previous month, indicating that the financial system's support for the real economy continued to increase. This growth was mainly due to the acceleration of government bond issuance and the activity of corporate bond financing.

In February, the pace of local government bond issuance accelerated significantly, of which the issuance scale of special refinancing special bonds used to resolve local debts was close to 800 billion yuan, more than one-third of last year's total, and an increase of more than 600 billion yuan from January. This accelerated issuance not only provides sufficient financial support for local governments, but also becomes a major driver of the growth of social financing. However, industry experts pointed out that with the rapid issuance of refinancing special bonds, financing platforms and other entities may use more bond issuance funds to repay bank loans, which may have a certain impact on the total amount of credit in the short term.

The rapid growth of net financing of corporate bonds has also provided important support for the scale of social financing. Since the second half of last year, the interest rate in the bond market has been generally low, and enterprises have seized this favorable opportunity to increase bond financing, effectively reducing the overall financing cost. This low-cost financing environment not only increases the willingness of enterprises to raise funds, but also optimizes their debt structure and injects more vitality into the real economy.

From an investment perspective, the highlights of February's social financing data are mainly reflected in the following aspects:

Increased policy support: The acceleration of government bond issuance reflects the importance of local debt resolution and economic stability at the policy level, providing a clear policy signal for the market.

Declining corporate financing costs: Corporate bond financing in a low-interest rate environment has not only reduced the financial burden of enterprises, but also provided investors with more choices of high-quality bond assets.

Short-term credit fluctuations: The rapid issuance of refinancing special bonds may have a certain impact on the total amount of short-term credit, and investors need to pay attention to its potential impact on banks' credit business.

Credit support for the real economy is still relatively strong

Although affected by seasonal factors and special bond swaps, the RMB loan data in February remained at a historically high level, reflecting the continued support of the financial system for the real economy. Although February has always been a small month for loans, and the Spring Festival effect has led to large fluctuations in loans, the increase in RMB loans in February this year still reached one trillion yuan, showing a strong ability to provide credit.

The acceleration of the issuance of local government special bonds was an important factor influencing the loan data in February. After the special bond swap financing platform loans, some of the existing loan data may be reduced, but this is only a transformation of the capital structure, and the financing support for the real economy has not decreased. On the contrary, special bond swaps can help local governments reduce their debt burdens and free up more funds for livelihood protection and innovation support, thereby enhancing the internal vitality of economic development and providing potential space for future credit growth. According to the agency's estimates, if the impact of the special bond replacement factor is restored, the new RMB loans in February may increase by about 200 billion yuan. From January to February this year, the scale of replacement bond issuance was about 1 trillion yuan, of which nearly 800 billion yuan was issued in February, and the impact of special bond replacement on loans will continue to appear in the future.

Smoothing credit growth contributes to the sustainability of the real economy. From the perspective of the whole year, the stability of credit growth at the beginning of the year is more in line with the financing needs of the real economy. In the past 10 years, the cumulative new loans from January to February accounted for about 20%-30% of the new loans for the whole year, and even without taking into account the replacement of special bonds, the increase in loans in the same period this year is in line with the historical average. This steady pace of credit disbursement has laid a good foundation for economic growth throughout the year.

Monetary policy will adhere to the "four balances"

This year, the PBOC's monetary policy will continue to be moderately accommodative, while focusing on balancing multiple objectives. Pan Gongsheng, Governor of the People's Bank of China, recently stressed that monetary policy needs to balance short-term and long-term, stable growth and risk prevention, internal equilibrium and external equilibrium, and support for the real economy and maintain the health of the banking system. This "four balances" suggests that this year's monetary policy should not only support the real economy, but also guard against risks and deal with internal and external constraints such as interest rate differentials between China and the United States and net interest margins of banks. Industry experts expect that monetary policy will be coordinated in terms of aggregate, structure, interest rate and exchange rate, forming a policy combination effect.

At present, the average reserve requirement ratio of China's financial institutions is 6.6 percent, and there is still room for decline. Industry experts believe that the timing and intensity of the RRR cut need to be flexibly grasped to maximize the effectiveness of the policy. The current level of policy rates, the abundance of liquidity, and the use of structural monetary policy tools fully reflect the position of supportive monetary policy. However, the economy still faces internal and external challenges and uncertainties in the process of sustained economic recovery, and monetary policy needs to maintain reasonable space and flexibly respond to future changes.

Reducing the cost of comprehensive social financing requires comprehensive measures. Market experts pointed out that structural interest rate cuts will also help reduce the cost of funds for commercial banks, support banks to increase support for the real economy while maintaining a relatively stable net interest margin, and promote a steady decline in the financing costs of enterprises and residents. In addition, structural monetary policy tools can guide the flow of funds to emerging areas and weak links in the economy, which is of great significance for economic transformation and people's livelihood and employment.

From Jingtai's point of view, this year's monetary policy will show the following characteristics:

Equal emphasis on RRR cuts and structural tools: There is still room for RRR cuts, but they need to be flexible and grasp the timing; Structural monetary policy tools will focus on supporting emerging areas and weak areas.

Long-term trend of declining financing costs: Structural interest rate cuts and comprehensive policies will promote a steady decline in social financing costs, which is good for the credit needs of enterprises and households.

Diversification of the policy toolbox: The abundance of policy tools provides more options for dealing with the complex economic environment, and investors need to pay attention to the practical effects of the policy mix.