Report Industry Investment Rating There is no information provided in the content about the report industry investment rating. Core Viewpoints of the Report The report analyzes the liquidity situation in December 2025 and makes a forecast for January 2026. In December, the central bank actively injected liquidity, and the funds across the year were stable. The monetary policy emphasizes cross - cycle balance and flexible and efficient use of reserve requirement ratio cuts and interest rate cuts. In January, the liquidity gap pressure is relatively large, and the potential disturbances on the bank's liability side may increase in the middle and late months, but the funds fluctuation may be relatively mild, and attention should be paid to the marginal changes in the bank's liability pressure after the increase in fiscal factor disturbances [1][3][4]. Summary According to the Directory 1. December 2025 Funds and Liquidity Review: Active Injection, Stable across the Year (1) Funds Review: Narrow - range Fluctuation Continued In December 2025, the overnight fluctuation range narrowed compared with the previous month, and the 7D funds fluctuation range widened. The overnight funds basically ran stably around 1.28%, and the 7D funds were stable around 1.45% from the beginning of the month to the 23rd, then rose continuously until reaching 1.9821% on the 31st. The overnight and 7D funds did not show an inversion. The funds were loose at the beginning of the month, the central bank carried out 100 billion yuan of 3M repurchase on the 5th, and 60 billion yuan of 6M repurchase in the middle of the month, continuing the "short - term contraction and long - term expansion" operation. At the end of the year, affected by seasonal factors, the 7D funds price fluctuated slightly. The funds across the year were relatively stable [11][12]. (2) Liquidity Review: The Central Bank Actively Injected in December, Continuing the "Short - term Contraction and Long - term Expansion" - **Liquidity Aggregate**: In December, the base money may have increased by 1.7 trillion yuan, with government deposits supplementing about 1 trillion yuan, the central bank's net injection totaling 752.8 billion yuan, and foreign exchange funds continuing to withdraw slightly by 7 billion yuan. After deducting the consumption of excess reserves, the excess reserves at the end of the month may have increased by about 1 trillion yuan, and the excess reserve ratio may be around 1.5%, at a seasonal level. The narrow - sense excess reserve level after deducting reverse repurchases may be around 0.8%, close to the seasonal level [36]. - **Open - market Operations**: In December, the central bank's open - market reverse repurchases slightly increased, with a net injection of 28.19 billion yuan. The MLF was injected with 40 billion yuan and 30 billion yuan matured, with a balance of 6.25 trillion yuan. The net injection of the outright reverse repurchase was 20 billion yuan, with a balance of 6.5 trillion yuan. The central bank also net - bought 5 billion yuan of national debt, carried out 26 billion yuan of treasury time deposits, and 15.94 billion yuan of PSL and other structural tools [46][51][54]. 2. December 2025 Monetary Policy Tracking: Focus on Cross - cycle Balance, Flexibly and Efficiently Use Reserve Requirement Ratio Cuts and Interest Rate Cuts In December 2025, important meetings emphasized "flexibly and efficiently using reserve requirement ratio cuts and interest rate cuts." The overall loosening may be relatively prudent, but the idea of liquidity protection continues. The central bank emphasizes cross - cycle balance to avoid large - scale policy expansion and contraction. The central economic work conference takes promoting stable economic growth and reasonable price recovery as important considerations. The fourth - quarter monetary policy meeting first proposed to "give play to the integrated effect of incremental and existing policies." In a neutral scenario next year, the policy interest rate is likely to be cut once, with a range of 10bp [3][57][63]. 3. January 2026 Gap Prediction: Disturbances May Increase in the Middle and Late Months (1) Rigid Gap: Reserve Requirement Slightly Consumes Excess Reserves, and MLF Maturities Decrease Marginally In January, the increase in general deposits may consume about 32.96 billion yuan of excess reserves. The MLF matures at 20 billion yuan, and the outright reverse repurchase matures at 1.7 trillion yuan (1.1 trillion yuan for 3M and 600 billion yuan for 6M), of which 1.1 trillion yuan of the 3M outright reverse repurchase was renewed on the 7th [69]. (2) Exogenous Shocks: Cash Withdrawal and Non - financial Institution Deposits Consume Liquidity at the End of the Year In January, cash withdrawal and non - financial institution deposits slightly consume excess reserves. Cash withdrawal may consume about 67.87 billion yuan of excess reserves, and non - financial institution deposits may consume about 16.36 billion yuan [71]. (3) Fiscal Factors: A Big Month for Taxation, Coupled with Government Bond Issuance, May Partially Consume Reserves In January, government bond issuance pressure increases. Considering factors such as payment and refund, taxation, and fiscal expenditure, government deposits may consume about 1.2 trillion yuan of liquidity [4][75][76]. (4) Comprehensive Judgment: Stable at the Beginning of the Month, Disturbances May Increase in the Middle and Late Months In January, the liquidity gap pressure is relatively large, but the bank's liquidity level at the beginning of the month may be relatively abundant. Affected by factors such as the maturity of high - interest deposits and the renewal of large - scale certificates of deposit, the potential disturbances on the bank's liability side may increase in the middle and late months. However, considering the current relatively low excess reserve level, the central bank has no intention of large - scale withdrawal, and the Spring Festival is later, so the funds fluctuation may be relatively mild. Attention should be paid to the marginal changes in the bank's liability pressure after the increase in fiscal factor disturbances [4][80].

1. Report Industry Investment Rating No information provided in the report. 2. Core Viewpoints of the Report - The 12th Politburo meeting emphasized the continued implementation of a more proactive fiscal policy and a moderately loose monetary policy, leveraging the integrated effects of existing and incremental policies and strengthening counter - cyclical and cross - cyclical adjustments. The government aims to enhance the adaptability of consumer goods supply and demand to promote consumption. The financial sector should work towards building a financial powerhouse [1][10]. - The government will implement a more effective and forceful proactive fiscal policy, with the issuance of local government bonds exceeding 10 trillion yuan for the first time [2][13]. - The central bank focuses on cross - cyclical balance, with net purchases of 50 billion yuan of treasury bonds in November, slightly lower than market expectations [3][14]. - Financial regulators have launched a pilot program for commercial real estate REITs and lowered the risk factors for insurance companies' stock investments [4][18]. - In the real estate sector, Vanke is seeking an extension of its domestic bonds, and Shenzhen has introduced new rules for housing provident fund withdrawals to support home purchases [5][23]. 3. Summary by Directory 3.1 Macro - tone - The Politburo meeting on December 8 proposed that next year's economic work should continue to implement a more proactive fiscal policy and a moderately loose monetary policy, leveraging the integrated effects of existing and incremental policies, strengthening counter - cyclical and cross - cyclical adjustments, focusing on domestic demand, and promoting innovation - driven development [10]. - On November 26, six departments jointly issued a plan to enhance the adaptability of consumer goods supply and demand, aiming to form three trillion - level consumption sectors and ten billion - level consumption hotspots by 2027 and establish a high - quality development pattern of supply and consumption interaction by 2030 [10][12]. - On December 3, Wang Jiang proposed accelerating the construction of a financial powerhouse, developing diversified financing methods such as equity and bond financing, and steadily promoting the development of futures, derivatives, and asset - backed securities [11]. 3.2 Fiscal Policy - On December 2, Minister of Finance Lan Fuan emphasized the implementation of a more effective and forceful proactive fiscal policy, expanding domestic demand, and optimizing government investment. The government should also prevent and resolve local government debt risks [13][15]. - As of December 2, the issuance scale of national local government bonds reached approximately 10.1 trillion yuan, breaking through the 10 - trillion - yuan mark for the first time [2][13][15]. 3.3 Monetary Policy - On December 4, Central Bank Governor Pan Gongsheng mentioned that the central bank should focus on cross - cyclical balance, avoid excessive policy adjustments, and use various monetary policy tools to smooth economic fluctuations [14][17]. - In November, the central bank net - bought 50 billion yuan of treasury bonds, slightly lower than market expectations. However, the need for banks to increase bond purchases significantly is limited. The central bank's bond - buying may still be an important tool for liquidity injection next year [3][14][17]. 3.4 Financial Supervision - On December 6, CSRC Chairman Wu Qing encouraged leading institutions to build world - class investment banks through mergers and acquisitions, and "moderately loosen restrictions" on high - quality securities firms, while the Asset Management Association of China may cut the salaries of underperforming fund managers [18][21][22]. - On November 28, the CSRC issued a draft announcement for a pilot program of commercial real estate investment trust funds, specifying product definitions, registration, and management requirements [19][21]. - On December 5, the National Administration of Financial Regulation adjusted the risk factors for insurance companies' stock investments, reducing the risk factors for certain stocks held for a certain period [20][21]. 3.5 Real Estate Policy - On November 26, Vanke sought an extension of its 2 billion yuan domestic bond due on December 15, 2025. The proposed extension plan includes a one - year extension of principal and interest payments, with the interest rate remaining unchanged [23][26]. - On December 5, Shenzhen introduced new rules for housing provident fund withdrawals, increasing the support for home purchases, including different withdrawal limits for the first, second, and subsequent homes [24][26]. - On December 6, a media outlet under the Ministry of Housing and Urban - Rural Development stated that the vitality of the real estate market is crucial for high - quality development. Local governments should actively resolve the risks of troubled real estate enterprises [24][25][26].

Core Viewpoint - The article emphasizes the importance of balancing monetary policy's strength, timing, and rhythm to support economic growth and maintain price stability while enhancing financial support for structural adjustments and high-quality development [1][2] Group 1: Short-term vs Long-term Relationship - The need for comprehensive use of various monetary policy tools to strengthen counter-cyclical adjustments and effectively smooth economic fluctuations is highlighted [1] - It is crucial to focus on cross-cycle balance to avoid excessive policy measures that could lead to diminishing returns and long-term side effects, thereby better supporting key areas and weak links for sustainable growth [1] Group 2: Growth vs Risk Prevention Relationship - The changing requirements for monetary credit growth in the real economy due to structural transformation necessitate improving the efficiency of existing funds and optimizing the allocation of new loans [1] - Balancing financial support for economic growth with the health of financial institutions is essential to enhance fund allocation efficiency and promote sustainable credit and financial stability [1] Group 3: Internal vs External Relationship - China's monetary policy primarily considers domestic economic and financial conditions while also accounting for the spillover effects of other economies' monetary policies [2] - The article notes that the flexibility of the RMB exchange rate has gradually increased, providing China with the capability to balance internal and external relationships effectively [2]