China reports record financing in January
In a significant financial development, China reported record-breaking financing figures for January 2025, with social financing reaching 7.06 trillion yuan ($973.3 billion), according to the People's Bank of China. New yuan-denominated loans surged to 5.13 trillion yuan ($715 billion), marking a 210 billion yuan increase from the previous year and exceeding analyst expectations of 4.5 trillion yuan.
The M2 money supply grew by 7 percent year-on-year, reaching 318.52 trillion yuan ($43.9 trillion) by the end of January. This robust financial performance was attributed to both strong on-balance-sheet loan growth and accelerated government debt issuance, as noted by Dong Ximiao, chief researcher at Merchants Union Consumer Finance Company Limited.
Bankers attribute the strong credit data partly to the Chinese New Year period, citing increased funding demands for supply chain payments, project settlements, and employee compensation. Zhang Wenlang, chief macro analyst at CICC's research department, emphasized the impressive nature of these figures, particularly given the high base comparison from the previous year.
However, market observers note potential challenges in maintaining this momentum, citing fewer working days in January, a cautious lending environment, and ongoing economic uncertainties. The property sector remains a focal point, with authorities considering a 50 billion yuan support plan for developer China Vanke, including measures such as purchasing unsold properties and providing favorable loans.
This financial expansion represents China's continued efforts to support economic recovery amid various challenges, including trade tensions with the United States. While the January figures demonstrate a proactive approach to supporting the real economy, questions remain about the sustainability of credit demand and the long-term effectiveness of these financial measures in maintaining economic growth.
