Vi e w p o i n t | Xiangrong Yu AC +852-2501-2754 xiangrong.yu@citi.com See Appendix A-1 for Analyst Certification, Important Disclosures and Research Analyst Affiliations. 12 Dec 2025 08:00:30 ET │ 9 pages China Economics Watch January as a Potential Window for Rate/RRR Cut CITI'S TAKE Money and credit numbers for November provided limited new information on the economy towards the year-end. Government bond issuance remains the most important driver for new TSF with added quota. Household risk appetite sta ...

Investment Rating - The report indicates a weaker credit impulse expected from Q3, suggesting a cautious outlook for the industry [4][13]. Core Insights - Strong government bond issuance has driven a 10bps increase in broad credit year-on-year, reaching 9.1% [3][13]. - Private credit demand remains weak, with bank loans unchanged at 7.1%, reflecting subdued private credit amid a softer property market and external tariff impacts [3][13]. - A supplementary budget of Rmb0.5-1 trillion is anticipated from Beijing in September/October to address slowing GDP growth, projected to dip to 4.5% year-on-year [5][13]. Summary by Sections - **Credit Impulse and Government Bonds**: The fiscal-led credit impulse peaked due to strong government bond issuance, which has improved liquidity for local governments and infrastructure entities [3][4]. - **Future Projections**: The remaining quota for government bond issuance in the second half of 2025 is expected to be below Rmb6 trillion, leading to a reversal in the credit impulse trend [4][5]. - **Economic Growth Outlook**: The report forecasts a slowdown in real GDP growth to 4.5% year-on-year in Q3, influenced by the payback of front-loaded exports and a negative deflationary feedback loop [5][13].