Core Insights - The current financial structure in China is undergoing profound changes, primarily characterized by a historical adjustment in the relationship between direct and indirect financing [2][3] - Direct financing has seen a steady increase in its share, while the proportion of indirect financing has been declining, marking a significant shift not observed in the past several decades [2][3] Group 1: Financial Structure Changes - As of January to November 2025, the share of indirect financing dropped to 45.7%, while direct financing rose to 47.4%, indicating a trend where direct financing outpaces indirect financing [2] - The growth rate of credit demand has significantly decreased, with the credit balance growth rate falling from 12.8% in 2020 to 6.4% currently [2] Group 2: Factors Driving Direct Financing - The demand for direct financing is driven by the need to bypass traditional bank credit channels, reflecting a more market-oriented allocation of funds that aligns well with emerging economic sectors [3] - The development of multi-tiered capital markets, including platforms like the Sci-Tech Innovation Board and the Beijing Stock Exchange, has effectively promoted the expansion of direct financing [3] Group 3: Future Outlook - The future trend indicates a more proactive policy stance, with fiscal financing needs expected to provide substantial support to the market [4] - Traditional sectors such as real estate and infrastructure are anticipated to stabilize and gradually improve after 2026, leading to a recovery in related financing demands [4] - The development of capital markets is crucial, with sustained demand from the real economy for capital market support, alongside unprecedented policy backing for the stock market [4] - The optimization of China's financial structure is entering a critical phase, with direct financing expected to surpass indirect financing, which will have multiple positive implications for economic development [4]