1. Report's Industry Investment Rating No information about the industry investment rating is provided in the report. 2. Report's Core View - In 2025, China's foreign trade imports and exports reached 45.47 trillion yuan, a record high, with a year - on - year increase of 3.8%. Exports were 26.99 trillion yuan, up 6.1% year - on - year, and imports were 18.48 trillion yuan, up 0.5% year - on - year. Exports to Africa were outstanding, with year - on - year growth rates of 6.0%, 8.0%, 18.4%, and - 18.2% for the EU, ASEAN, Africa, and the US respectively. High - tech product exports reached 5.25 trillion yuan, up 13.2% year - on - year. In December 2025, import and export growth accelerated. The total import and export value was 4.26 trillion yuan, up 4.9% year - on - year [2][98]. - In 2026, the bond market may perform better than expected. Long - term bonds may experience a rebound from oversold conditions. Since the second half of 2025, the bond market has often deviated from the fundamentals and may be dominated by institutional behavior. Currently, long - term bond yields are at a one - year high, making long - term bonds attractive for investment. It is expected that the yield of the 30Y Treasury active bond will gradually return to around 2.2% in the first quarter. However, due to the strong stock market, trading desks may not buy ultra - long - term bonds in the short term. Major opportunities for ultra - long - term bonds await a significant decline in institutional expectations for the stock market and a reduction in policy interest rates [4][98]. 3. Summary by Relevant Catalogs 3.1 Macro News - **Import and Export Growth**: In December 2025, the total import and export value was 4.26 trillion yuan, up 4.9% year - on - year, 0.9 percentage points higher than in November. Exports were 2.54 trillion yuan, up 5.2% year - on - year (a 0.5 - percentage - point decrease from November), and imports were 1.73 trillion yuan, up 4.4% year - on - year (a 2.7 - percentage - point increase from November). Emerging markets played a significant role in driving exports, while exports to the US continued to be a drag. Core drivers of export growth included the release of Christmas - season demand and the trade transfer effect. High - end and mid - end manufacturing became the core growth engine, with strong performance in electromechanical and high - tech products, while labor - intensive products still faced pressure [11][13][23]. - **Financial Statistics**: At the end of 2025, the stock of social financing scale was 442.12 trillion yuan, up 8.3% year - on - year. The annual increment of social financing scale in 2025 was 35.6 trillion yuan, 3.34 trillion yuan more than the previous year. At the end of December 2025, M2, M1, and M0 increased by 8.5%, 3.8%, and 10.2% year - on - year respectively. The balance of domestic and foreign currency loans increased by 6.2% year - on - year, and the balance of RMB loans increased by 6.4% year - on - year [19]. - **Policy Measures**: On January 15, 2026, the central bank announced two policy measures: lowering interest rates of various structural monetary policy tools and improving and expanding support for these tools. Specific measures included rate cuts, increasing quotas, and expanding the scope of support for different types of loans and tools [24][26]. 3.2 Medium - term High - frequency Data - **Consumption**: As of January 11, the daily average retail and wholesale volumes of passenger cars decreased by 32.0% and 40.0% year - on - year respectively. As of January 16, the 7 - day total national box office revenue decreased by 24.3% year - on - year. As of January 9, the total retail volume and total retail sales of three major household appliances decreased by 38.3% and 39.4% year - on - year respectively [25][30]. - **Transportation**: As of January 17, the 7 - day average migration scale index increased by 2.1% year - on - year. As of January 11, the number of civil aviation flights decreased by 2.5% year - on - year. As of January 16, the 7 - day average subway passenger volume in first - tier cities increased by 1.2% year - on - year. As of January 11, postal express collection and delivery volumes, railway freight volume, and highway truck traffic decreased year - on - year [33][36]. - **Industry**: As of January 16, iron ore inventory increased by 10.0% year - on - year, while rebar inventory decreased by 1.7% year - on - year, and float glass enterprise inventory increased by 20.9% year - on - year. As of January 8, the daily coal consumption of key power plants increased by 1.0% year - on - year. As of January 16, the apparent consumption of steel and rebar increased by 2.6% and 2.8% year - on - year respectively, while the apparent consumption of wire rods decreased by 2.7% year - on - year. As of January 14 - 15, the operating rates of blast furnaces, asphalt, soda ash, and PVC decreased year - on - year [38][40][47]. - **Real Estate**: As of January 16, the 7 - day total commercial housing transaction area in 30 large - and medium - sized cities decreased by 32.0% year - on - year. As of January 9, the second - hand housing transaction area in 9 sample cities decreased by 29.4% year - on - year. As of January 11, the land transaction area and land transaction price in 100 large - and medium - sized cities decreased year - on - year [48][52][55]. - **Prices**: As of January 16, the average wholesale prices of pork, vegetables, and 6 key fruits showed different year - on - year and 4 - week - on - 4 - week changes. The average prices of northern port thermal coal, WTI crude oil, rebar, iron ore, and glass also had various year - on - year and 4 - week - on - 4 - week changes [58][63][70]. 3.3 Bond and Foreign Exchange Markets - **Interest Rates**: On January 16, overnight Shibor, R001, R007, DR001, DR007, IBO001, and IBO007 had different changes compared to January 12. Most Treasury bond yields declined. On January 16, the yields of 1 - year/5 - year/10 - year/30 - year Treasury bonds decreased by 6.8BP/4.4BP/3.7BP/0.1BP respectively compared to January 9. The yields of 1 - year/5 - year/10 - year/30 - year China Development Bank bonds had different changes compared to January 9. The yields of 1 - year/5 - year/10 - year local government bonds decreased compared to January 9. The yields of AAA 1 - month/1 - year and AA+ 1 - month/1 - year inter - bank certificates of deposit decreased compared to January 9 [75][79][81]. - **Foreign Exchange**: As of January 16, 2026, the ten - year Treasury bond yields of the US, Japan, the UK, and Germany were 4.24%, 2.18%, 4.40%, and 2.89% respectively, with different changes compared to January 9. The central parity rate and spot exchange rate of the US dollar against the RMB on January 16 decreased compared to January 9 [87][90]. 3.4 Institutional Behavior - Since 2026, the durations of medium - and long - term bond funds have generally decreased. On January 16, 2026, the estimated median duration of medium - and long - term interest - rate bond funds was about 3.3 years, a decrease of about 1.2 years compared to December 31, 2025. The estimated median duration of medium - and long - term credit bond funds was about 2.2 years, a decrease of about 0.3 years compared to December 31, 2025 [93][95]. 3.5 Investment Recommendations - In 2026, the bond market may perform better than expected. Pay attention to the possible oversold rebound of long - term bonds. It is recommended to focus on the band - trading opportunities of ultra - long - term bonds, allocate 3 - 5Y capital bonds to obtain coupons, and also pay attention to multi - asset investment opportunities [4][98].

Report Summary 1. Investment Rating - No investment rating for the industry is provided in the report. 2. Core Viewpoint - In December 2025, the financial data continued the pattern of weak credit recovery and structurally loose liquidity. Looking ahead, the support of cross - border capital inflows due to RMB appreciation for monetary growth is expected to continue. The central bank is more likely to use structural tools and optimize existing policies to guide capital flows. For the equity market, the logic relying solely on aggregate easing is insufficient, and more attention should be paid to the financing structure, capital flow, and the sustainability of real - economy repair. For the bond market, it may fluctuate within a range in the short term as the real - economy demand repair is not stable, and there are constraints from inflation and government bond supply [3][8]. 3. Summary by Directory 3.1 Socio - Financial Growth Continues to Decline, with Government Bonds as the Core Drag Factor - In December, the new social financing scale was about 2.21 trillion yuan, a year - on - year decrease of 645.7 billion yuan. The year - on - year growth rate of social financing stock dropped from 8.5% in the previous month to 8.3%. The significant year - on - year decline in government bond financing was the main reason for the weakening of social financing. After excluding government bonds, new RMB loans slightly exceeded expectations and supported social financing in December. However, the expansion momentum of social financing growth is declining [5]. 3.2 Continued Differentiation in Credit Structure - In December, the new RMB loan volume was about 910 billion yuan, a year - on - year decrease of 80 billion yuan. Resident and enterprise financing continued to diverge. Resident loans were negative year - on - year, with both short - term and long - term loans being weak, related to the sluggish real - estate sales, low consumer willingness, and early loan repayment. In contrast, enterprise financing recovered significantly at the end of the year, with short - term loans, long - term loans, and bill financing all increasing. The improvement was driven by policy - based projects and year - end bank impulse, but its sustainability is to be observed [6]. 3.3 M2 Increase Driven by Liability - Side Structure Change - In December, the year - on - year growth rate of M2 rose to 8.5%. The change mainly came from the liability - side structure adjustment, as a large number of inter - bank certificates of deposit matured and the issuance growth of bank financial bonds and inter - bank certificates of deposit slowed down, leading to funds flowing back to the banking system. The RMB appreciation also supported the M2 growth. In contrast, the year - on - year growth rate of M1 declined, due to a high base and weak enterprise capital turnover and investment expansion willingness [7]. 3.4 Summary and Outlook - Overall, the December financial data maintained the pattern of weak credit recovery and structurally loose liquidity. The support of cross - border capital inflows due to RMB appreciation for monetary growth is expected to continue. The central bank will use structural tools and optimize existing policies. For the equity market, focus on financing structure and real - economy repair signals. For the bond market, it may fluctuate within a range in the short term due to unstable real - economy demand repair and constraints from inflation and government bond supply [8].

Core Insights - The analysis by CITIC Securities on financial data for 2025 indicates that the social financing scale increased by 2.21 trillion RMB in December 2025, which is a decrease of 0.65 trillion RMB compared to the same period last year, aligning with market expectations [1] - The decline is attributed to the early issuance of government bonds and the weakening support from high base effects in previous years [1] - There is a marginal improvement in credit issuance to the corporate sector, driven by banks' pre-arranged project reserves for the "New Year" lending phase in early 2026 [1] - However, retail credit to households remains weak, with expectations for a recovery in credit demand linked to macroeconomic improvements and supportive policies [1] 2026 Outlook - CITIC Securities anticipates that macroeconomic policies will continue to maintain an active fiscal stance and a relatively loose monetary policy [1] - Government bonds are expected to remain a key driver for the growth of social financing [1] - The forecast for the growth rate of RMB credit in 2026 is projected to be between 7% and 8% [1] - A substantial improvement in the banking sector's fundamentals is contingent upon a real recovery in credit demand from the real economy and further enhancements in macroeconomic expectations [1]

Core Viewpoint - In 2025, China's monetary policy is expected to be moderately accommodative, supporting economic recovery with significant growth in credit and social financing, indicating a positive trend for the economy [1][7]. Group 1: Credit and Financing Growth - In 2025, new RMB loans are projected to reach 16.27 trillion yuan, with a total social financing increment of 35.6 trillion yuan, which is an increase of 3.34 trillion yuan compared to the previous year [1][3]. - By the end of 2025, the total social financing stock is expected to grow by 8.3% year-on-year, while the broad money supply (M2) is anticipated to increase by 8.5%, both significantly exceeding nominal GDP growth rates [1][6]. - In December 2025, RMB loans increased by 910 billion yuan, showing a year-on-year decrease of 80 billion yuan but a month-on-month increase of 520 billion yuan, indicating a stronger demand from enterprises compared to households [2][3]. Group 2: Structural Optimization - The structure of financing is improving, with non-loan financing methods contributing significantly to the total social financing increment, surpassing 50% of the total, reflecting the effectiveness of financial supply-side structural reforms [3][5]. - By the end of 2025, the balance of medium- and long-term loans in the manufacturing sector is expected to grow by 6.6%, while infrastructure loans are projected to increase by 6.9%, and services (excluding real estate) by 9.4% [4][5]. Group 3: Interest Rates and Costs - The average interest rates for newly issued corporate loans and personal housing loans are approximately 3.1%, showing a decline of 2.5 and 2.6 percentage points since the second half of 2018 [5][6]. - The financing costs are decreasing, with the new loan rates for technology and digital economy sectors being 2.81% and 2.7%, respectively, both lower than the previous year [5][6]. Group 4: Future Outlook - For 2026, it is anticipated that more proactive macroeconomic policies will continue to enhance counter-cyclical and cross-cyclical adjustments, with expected new credit of about 18 trillion yuan and social financing increment reaching 38 trillion yuan [7].

Core Viewpoints - The widening gap between M2 and M1 growth rates is primarily due to the "misalignment" in government debt financing and the increasing stability of residents' capital market allocations [1][52] - In December 2025, the M2 growth rate increased by 0.5 percentage points to 8.5%, while the new M1 growth rate decreased by 1.1 percentage points to 3.8% [42][51] - The government bond net financing in December 2025 decreased by 10,733 billion yuan, which is a significant factor dragging down social financing [23][52] Government Debt and Financing - The misalignment in government debt financing at the end of the year is the primary factor affecting social financing, with a notable decrease in government bonds issued [2][23] - The issuance of local government refinancing bonds concentrated at the end of 2024 and the front-loading of fiscal efforts in 2025 contributed to this misalignment [23][52] - In January 2026, 24 provinces and cities planned to issue 2,577.8 billion yuan in new debt, which is an increase of 1,356.8 billion yuan compared to January 2025 [2][23] Monetary Policy Adjustments - The central bank introduced two new policies: a 25 basis point reduction in the interest rate of structural monetary policy tools and enhancements to these tools to increase support for private, technological, and green sectors [26][28] - Following the interest rate cut on January 15, 2026, the one-year re-lending rate decreased from 1.5% to 1.25% [26][28] - The new structural monetary policy tools are expected to guide banks in credit allocation and stabilize net interest margins, creating room for future interest rate cuts [28][54] Credit and Loan Trends - In December 2025, new credit totaled 9,100 billion yuan, a year-on-year decrease of 800 billion yuan, primarily due to a decline in household loans [29][55] - Household loans decreased by 4,416 billion yuan year-on-year, marking the sixth consecutive month of decline, influenced by low employment prospects and fluctuations in real estate prices [15][29] - Corporate medium and long-term loans saw a rebound for the first time in 31 months, with an increase of 3,300 billion yuan in December 2025, attributed to the impact of new policy financial tools [18][53]

Social Financing - In December 2025, the domestic social financing scale increased by 22,075 billion yuan, a year-on-year decrease of 6,462 billion yuan[1] - The new government bond issuance in December was 6,833 billion yuan, a year-on-year decrease of 10,733 billion yuan, primarily due to the earlier issuance schedule in 2025[5] - The total amount of new government bonds issued in 2025 was 13.84 trillion yuan, an increase of 2.54 trillion yuan compared to 2024[5] Loans and Deposits - In December 2025, non-financial companies and other sectors added 10,700 billion yuan in new RMB loans, a year-on-year increase of 5,800 billion yuan[10] - Fiscal deposits decreased by 1.38 trillion yuan in December, indicating a potential acceleration of fiscal funds into the real economy[10] - Resident household loans in December were negative at -916 billion yuan, reflecting weak consumer demand[15] Monetary Supply - M2 grew by 8.5% year-on-year in December, with an increase of 0.5 percentage points from the previous month, while M1 grew by 3.8%, down by 1.1 percentage points[16] - The M2-M1 gap widened to 4.7 percentage points, an increase of 1.6 percentage points from the previous month[16] Interest Rates - The central bank announced a structural interest rate cut of 0.25 percentage points, aimed at reducing financing costs for the real economy[20] - The weighted average interbank lending rate in December was 1.36%, down by 0.06 percentage points from the previous month[20]

Monetary Supply and Financing - The growth rate of total social financing (TSF) in December 2025 was 8.3%, a slight decrease of 0.2 percentage points from the previous value of 8.5%[1] - M2 growth rate increased to 8.5% in December 2025, up from 8.0% in November[1] - M1 growth rate fell to 3.8%, down from 4.9% in the previous month, indicating a slowdown in active funds[1] - The "scissors difference" between M2 and M1 expanded to 4.7%, compared to 3.1% in November, marking the highest level since June 2025[3] Loan and Deposit Trends - New RMB loans in December 2025 amounted to approximately 0.91 trillion yuan, significantly higher than November's 0.39 trillion yuan, but still down by 800 billion yuan year-on-year[2] - Total new deposits rose to 1.68 trillion yuan in December 2025, up from 1.41 trillion yuan in November, with a year-end deposit balance of 328.64 trillion yuan, reflecting an 8.7% year-on-year growth[2] - The proportion of RMB loans to the total social financing stock decreased to 60.7%, down 1.1 percentage points year-on-year, indicating a shift towards direct financing channels[2] Policy Adjustments and Economic Outlook - On January 15, 2026, the People's Bank of China announced a 0.25 percentage point reduction in various structural monetary policy tool rates, aimed at lowering financing costs in key sectors[3] - The central bank's actions are expected to maintain a loose monetary environment, with further room for rate cuts and reserve requirement ratio reductions anticipated in 2026[4] - The focus of monetary policy is shifting towards targeted support for specific sectors, such as technology innovation and private enterprises, rather than broad-based easing[4]

Group 1: Economic Indicators - The 2-year U.S. Treasury yield increased by 6.07 basis points to 3.564% [1] - The 5-year U.S. Treasury yield rose by 5.94 basis points to 3.768% [2] - The 10-year U.S. Treasury yield climbed by 4.53 basis points to 4.171% [2] Group 2: Market Performance - The Baltic Dry Index closed at 1566.00, down 2.61% [4] - The Nasdaq Index closed at 23530.02, up 0.25% [4] - The Dow Jones Industrial Average closed at 49442.44, up 0.60% [4] - The S&P 500 closed at 6944.47, up 0.26% [4] - The Hang Seng Index closed at 26923.62, down 0.28% [4] - The Shanghai Composite Index closed at 4112.60, down 0.33% [4] Group 3: Monetary Policy - The central bank announced a reduction in the re-lending and rediscount rates by 0.25 percentage points starting January 19 [3] - The total social financing scale for the year 2025 is projected to reach 35.6 trillion yuan [3]

Group 1: Monetary Supply and Growth - As of the end of December, the broad money supply (M2) reached 340.29 trillion yuan, reflecting a year-on-year growth of 8.5% [1] - The narrow money supply (M1) stood at 115.51 trillion yuan, with a year-on-year increase of 3.8% [1] - The currency in circulation (M0) amounted to 14.13 trillion yuan, showing a year-on-year growth of 10.2% [1] - A net cash injection of 1.31 trillion yuan was recorded for the year [1] Group 2: Social Financing and Loans - The total social financing scale for the year 2025 is projected to reach 35.6 trillion yuan, an increase of 3.34 trillion yuan compared to the previous year [2] - By the end of 2025, the total social financing stock is expected to be 442.12 trillion yuan, marking a year-on-year growth of 8.3% [3] - The balance of loans to the real economy is anticipated to be 268.4 trillion yuan, with a year-on-year increase of 6.3% [3] - In 2025, the total increase in RMB loans is expected to be 16.27 trillion yuan, with household loans rising by 441.7 billion yuan and corporate loans increasing by 15.47 trillion yuan [4] Group 3: Deposits and Interest Rates - The total increase in RMB deposits for the year is projected to be 26.41 trillion yuan, with household deposits rising by 14.64 trillion yuan [5] - The weighted average interbank lending rate in December was 1.36%, down 0.21 percentage points from the same period last year [6] - The loan market quotation rate for one-year loans was reported at 3.0%, and for loans over five years at 3.5%, both lower by 0.1 percentage points compared to the end of the previous year [7] Group 4: Currency Exchange Rates - By the end of December, the CFETS RMB exchange rate index was at 97.99, a decrease of 3.43% compared to the end of the previous year [8] - The RMB to USD exchange rate was 7.0288, appreciating by 2.27% year-on-year, while the RMB to Euro rate depreciated by 8.62% [8]

Group 1 - The central bank released financial statistics for 2026, indicating that the total social financing scale increased by 35.6 trillion yuan in 2025, which is 3.34 trillion yuan more than the previous year [1][5] - As of the end of December, the M2 balance was 340.29 trillion yuan, showing a year-on-year increase of 8.5%, while the M1 balance was 115.51 trillion yuan, up 3.8% year-on-year [1][5] - The year-on-year growth of RMB loans was 6.2%, and deposits increased by 8.7% [1][5] Group 2 - M1 growth is slowing down, with a decrease from 4.9% to 3.8% by the end of December, while M2 growth rebounded to 8.5% [1][5] - The M2-M1 differential increased to 4.7%, indicating a decline in corporate demand for current deposits and an increase in time deposits, reflecting a potential decrease in economic activity [1][5] - The growth rate of social financing stock fell to 8.3% by the end of December, maintaining a historical low, with government bonds significantly outpacing corporate bonds in the financing structure [1][5] Group 3 - The People's Bank of China announced a 0.25 percentage point reduction in the rates of structural monetary policy tools such as re-lending and rediscounting [2][6] - This move aims to lower the cost for financial institutions to obtain funds from the central bank, guiding credit flow to key areas for economic structural transformation [2][6] - There is potential for further reductions in reserve requirements and interest rates this year [2][6]