Group 1: Report Industry Investment Rating - Not provided in the given content Group 2: Core Viewpoints of the Report - In July 2025, RMB loans showed a negative growth of 5 billion yuan, but this was affected by seasonality, adjacent - month complementary factors, and local government implicit debt replacement. The year - on - year decrease in loan growth in July 2025 was relatively small compared to some historical months [1]. - By adding consecutive two - month credit increments and calculating the year - on - year increase or decrease, the degree of less growth in loans from April - May, May - June, and June - July 2025 was improving [2]. - Local government implicit debt replacement is beneficial for economic growth but leads to a slowdown in new credit readings. It's recommended to focus on broader financial aggregate indicators like social financing [2][3]. - In July 2025, the year - on - year growth rate of social financing stock was 9%, 0.1 percentage points higher than the previous month, and the year - on - year growth rate of M2 balance was 8.8%, 0.5 percentage points higher than the previous month, which mutually confirmed each other [3]. Group 3: Summary by Related Catalogs 1. From the Negative - Growth Credit - **Credit Negative Growth in July 2025**: In July 2025, RMB loans had a negative growth of 5 billion yuan. The last negative growth occurred in July 2005, when loans decreased by 3.21 billion yuan. July is a "small month" for loans, so a slight downward fluctuation in loan increments can lead to negative growth. The year - on - year decrease in July 2025 was 31 billion yuan, which was relatively small compared to some historical months [1]. - **Factors Affecting Credit Data**: Credit data is affected by seasonal fluctuations, adjacent - month complementary factors, and local government implicit debt replacement. By adding consecutive two - month credit increments, the less - growth situation was improving. Local government implicit debt replacement is beneficial for the economy but slows down new credit readings [2]. - **Suggestion on Financial Indicators**: It's recommended to focus on broader financial aggregate indicators like social financing to reduce the impact of local government implicit debt replacement. In July 2025, the year - on - year growth rate of social financing stock was 9%, 0.1 percentage points higher than the previous month, and the year - on - year growth rate of M2 balance was 8.8%, 0.5 percentage points higher than the previous month [3].

Core Viewpoint - The article discusses the current state of credit growth in China, highlighting that while there is a slowdown in year-on-year growth, it does not indicate a decrease in credit support for the real economy. Instead, it suggests that measures like local government debt replacement are beneficial for economic growth [3][4]. Summary by Sections Credit Growth Analysis - In May 2025, new RMB loans amounted to 620 billion, an increase of 340 billion from April but a decrease of 330 billion compared to the same month last year [3]. - The replacement of local government hidden debts is a significant factor affecting credit growth, allowing local governments to alleviate financial burdens [3]. Economic Indicators - Weakening effective demand is reflected in recent economic data, with manufacturing PMI for April and May at 49.0% and 49.5%, respectively, lower than the first quarter average of 49.9% [3]. - The PPI year-on-year growth rates for April and May were -2.7% and -3.3%, respectively, also lower than the first quarter average of -2.3% [3]. Historical Context and Policy Response - Historical experiences show that proactive policy responses can maintain or even strengthen credit support for the economy despite external shocks, as seen during the COVID-19 pandemic years [4]. - In 2022, a new policy tool was introduced to address capital shortages for major projects, leading to a significant increase in effective credit demand [4]. New Financial Tools - A new type of policy financial tool was proposed in a recent political meeting, which could theoretically leverage 20 trillion in credit demand for every 500 billion issued [5]. - This tool is seen as a key measure to promote credit issuance, suggesting a positive outlook for future credit growth [5]. Credit Growth Perspective - The article questions whether more credit growth is always beneficial, noting that excessive competition among financial institutions can lead to unsustainable practices [5]. - A moderate decline in credit growth is considered normal amid economic restructuring and increased direct financing [6]. Target Growth Rates - Considering various factors, a credit growth rate of around 7.5% for major state-owned banks is viewed as satisfactory in light of the GDP and CPI growth targets of approximately 5% and 2%, respectively [6].

Report Industry Investment Rating No relevant information provided. Core Viewpoints of the Report - Despite the slow credit growth during the local government implicit debt replacement phase, it doesn't mean a decline in credit support for the real economy; instead, it benefits economic growth. The new policy - type financial tool is a trump card for promoting credit, and there's no need to be pessimistic about future credit growth. Credit growth isn't necessarily better the more it is, and an appropriate decline in credit growth is normal during economic restructuring and the increase of direct financing ratio. Considering various factors, a credit growth rate of about 7.5% for state - owned large - scale banks is satisfactory [1][3][4]. Summary by Related Contents Credit Growth in May 2025 - In May 2025, new RMB loans were 62 billion yuan, 34 billion yuan more than in April and 33 billion yuan less than the same period last year. Local government implicit debt replacement is one of the factors affecting May's credit growth [1][9]. Impact of Debt Replacement on Credit - Local government implicit debt replacement uses low - cost, long - term local government bonds to replace high - cost, short - remaining - term debts, which helps relieve the debt chain, benefiting economic growth. During this phase, slow credit growth doesn't mean a decline in credit support for the real economy [1][9]. Weakening of Effective Demand - The weakening of effective demand is mainly due to external shocks such as US tariff policies. Economic data reflects this, like the domestic manufacturing PMI in April and May 2025 being 49.0% and 49.5% respectively, lower than the Q1 average of 49.9%, and the PPI year - on - year growth rates in April and May being - 2.7% and - 3.3% respectively, lower than the Q1 average of - 2.3% [1][9]. Historical Experience of Policy Intervention - Similar external shocks have been experienced in the past. As long as policies respond actively, credit support for the real economy won't weaken and may even strengthen. For example, in 2020 and 2022, affected by the COVID - 19 pandemic, RMB loans increased by 19.6 trillion and 21.3 trillion yuan respectively, 2.8 trillion and 1.4 trillion yuan more than the previous years. New regulatory tools were introduced, like the policy - based and development - oriented financial tools in 2022, which injected 740 billion yuan into real - sector enterprises by the end of October, stimulating more effective credit demand [2][11][13]. New Policy - Type Financial Tool - The Politburo meeting on April 25, 2025, called for the establishment of a new policy - type financial tool. Assuming an average project capital ratio of 20%, every 500 billion yuan of this tool can theoretically leverage 2 trillion yuan of credit funds, making it a trump card for promoting credit [3][13]. Issues with Excessive Credit Growth - Financial institutions' "scale complex" leads to "involution - style competition" in the deposit and loan markets. Excessive credit growth through loan "price wars" sacrifices the sustainability of banks' support for the real economy and the banks' operational stability, and provides a breeding ground for capital idling and arbitrage [3][13]. Appropriate Credit Growth Rate - During economic restructuring and the increase of direct financing ratio, an appropriate decline in credit growth is normal. Considering factors like the GDP growth target of about 5% and CPI growth target of about 2% this year, a credit growth rate of about 7.5% for state - owned large - scale banks is satisfactory [4][14].

Group 1: Market Operations - The central bank conducted a 135 billion yuan 7-day reverse repurchase operation on March 24, with an interest rate of 1.50%, resulting in a net withdrawal of 346 billion yuan for the day [2] - The interbank market showed a stable and slightly warm funding environment, with the weighted average repo rate for deposit institutions slightly declining [3] - The latest overnight financing rate in the US is reported at 4.29% [4] Group 2: Interest Rates and Bonds - The one-year interbank certificates of deposit traded at approximately 1.93%, showing a slight decline from the previous day [6] - Major interest rate bonds in the interbank market saw a general decline in yields, with specific rates for various maturities listed [8] - The government bond futures all closed higher, with the 30-year main contract rising by 0.33% [14] Group 3: Fiscal Data - In the first two months of the year, the national general public budget revenue was 438.56 billion yuan, a year-on-year decrease of 1.6%, with tax revenue down by 3.9% [12] Group 4: Bond Market Developments - The Shanghai Stock Exchange announced that investors can declare the bonds they buy on the same day for repo pledge [18] - The China Securities Depository and Clearing Corporation is expanding the range of bonds eligible for credit protection in repos to support financing for small and medium-sized enterprises [18] - Recent negative events in the bond market include rating delays and downgrades for specific issuers [18][19]