Thecover.cn:

What do you think of China's credit supply in 2023? How do you view the relatively large fluctuations in certain quarters or months? Will China continue to maintain a strong credit expansion in 2024? Thank you. 

Pan Gongsheng:

Since Mr. Xuan is responsible for the monetary policy department, he is in the position to answer your questions. 

Xuan Changneng:

This issue I believe is of great concern to the market entities and media. Mr. Pan provided some information earlier about credit support for the real economy. 

In 2023, the PBC utilized the dual functions of monetary policy tools in terms of aggregate and structure , guiding financial institutions to enhance loan support for the real economy. Consequently, the total scale of credit loans registered steady and rapid increase. By the end of 2023, outstanding RMB loans stood at 237.6 trillion yuan, marking a 10.6% increase year on year. This represented an increase of 22.7 trillion yuan in 2023, 1.3 trillion yuan more than that of 2022. The structure of loans also continued to improve. By the end of 2023, outstanding inclusive loans to micro and small businesses had increased by 23.5% year on year. The growth rates of loans to enterprises that use special and sophisticated technologies to produce novel and unique products, as well as to technological SMEs, were 18.6% and 21.9% year on year, respectively. Outstanding medium- and long-term loans to the manufacturing sector grew by 31.9% year on year, with loans to high-tech manufacturing industries surging by 34% and outstanding medium- and long-term loans to the infrastructure industry increasing by 15% year on year. The growth rates of loans to major sectors and weak links significantly exceeded the 10.6% growth rate of total loans.

Additionally, you mentioned that loan data fluctuated widely in certain quarters and months. According to previous years' data, the first quarter, especially the first month of the year, typically sees bigger increases in loans, while April, July, and October usually experience smaller increases. These seasonal changes are caused by objective economic and financial factors. As the saying goes, "The whole year's work depends on a good start in spring." Market entities often anticipate a strong start at the beginning of the year, and major projects typically commence early in the year. Spring plowing and wage payments before the Chinese New Year also lead to substantial financing needs. With pandemic prevention and control entering a new phase, the accumulated loan needs of the past three years were simultaneously released, resulting in a significant rise in loans in the first quarter of 2023. Economic recovery needs stable and sustainable loan support. The key is moderate control, respecting objective laws while avoiding abnormal loan behavior substantially diverging from previous levels. 

Regarding the loan situation in 2024, it is projected to maintain rapid growth in the first quarter, resulting from strong starts by banks and the benefits delivered by policies in the second half of 2023. The PBC will continue to guide financial institutions to ensure stable and sound support for the real economy, with loans being issued more evenly throughout the year.

Last but not least, I suggest not over-interpreting credit loan data for a single month. Rather, we should adopt diverse approaches to evaluate financial support to the economy, such as referring to the social financing scale, which covers a wider range, and observing changes in financing costs by referring to interest rates. Thank you.