Core Viewpoint - The article emphasizes the significance of comparing the monetary supply and creation between the People's Bank of China (PBOC) and the European Central Bank (ECB) to provide insights for China's monetary policy, especially in the context of the unique characteristics of the Chinese economy [1][3]. Group 1: Importance of Banking Systems - Both China and the Eurozone have relatively high importance in their banking systems, making the comparison of their monetary policies meaningful [3]. - The analysis focuses on the ability to control interest rates by maintaining net liquidity close to the balance level of the banking system [3]. Group 2: Changes in China's Central Bank - The PBOC has undergone significant transformation, with foreign exchange reserves dropping from over 80% of total assets in 2014-2016 to below 50% by early 2025, indicating a qualitative change in operational strategies [5]. - During the global financial crisis, liquidity surplus reached nearly 8% of GDP, which gradually decreased from 2010 to 2021, attributed to the accumulation of foreign exchange reserves [5]. Group 3: Financing Structure Comparison - China's financing structure is primarily based on indirect financing, mainly through credit loans, with deposit financial institutions holding over 60% of the financial sector's assets as of 2022, significantly higher than in developed countries [7]. - The broad money supply (M2) in China has been largely driven by asset expansion in indirect financing since 2022, with a relatively high growth rate due to market volatility [7][10]. Group 4: Monetary Supply and GDP Relationship - The role of money in the Chinese economy is significantly larger than in the Eurozone, with the money creation ratio to GDP increasing from slightly above 150% to nearly 220% from 2002 to 2024 [10][11]. - The growth rate of China's money supply has never been below 12%, with M2 growth nearing 30% during the global financial crisis [10]. Group 5: Central Bank's Role in Money Creation - The PBOC's share of money creation relative to GDP increased from 20% to nearly 50% after 2010, then steadily declined to below 15% by the end of the analysis period, indicating minimal inflationary pressure from the pandemic [13]. - In contrast, the ECB's influence on money creation was negligible before the global financial crisis, but it surged to over 25% of GDP during the pandemic, leading to significant inflation [14].

Core Viewpoint - The article emphasizes that China's economy has shown a stable and improving performance in the first half of the year, which is reflected in the financial data and the "credit image" of RMB assets, influencing their future valuation [1][29]. Financial Data Summary - In June, new RMB loans amounted to 2.24 trillion yuan, and the new social financing scale reached 4.2 trillion yuan, with a year-on-year growth of 8.9% in social financing stock and 8.3% in broad money supply (M2) [5][9]. - The Shanghai Composite Index increased by 2.76% in the first half of the year, while the 10-year government bond yield showed a "first up then down" trend [6]. - The RMB against the USD fluctuated but stabilized below 7.2 yuan after mid-May, with a 2.41% increase noted [7][9]. Economic Performance Indicators - The GDP for the first half of the year was 66.0536 trillion yuan, with a year-on-year growth of 5.3% [16]. - The contribution rates of the three drivers of economic growth were 52% from final consumption expenditure, 16.8% from capital formation, and 31.2% from net exports of goods and services [20]. Consumer Market Insights - The total retail sales of consumer goods reached 24.55 trillion yuan, growing by 5% year-on-year, with notable acceleration in service consumption [21]. - Six characteristics of consumption in the first half include accelerated service consumption, enhanced holiday consumption, and the rise of new consumption models [21]. Investment Trends - Fixed asset investment totaled 24.9 trillion yuan, with a nominal growth of 2.8%, indicating a cautious investment climate influenced by external complexities and internal price declines [22]. - The real estate market is experiencing a downturn, with sales area and amount decreasing, necessitating efforts to stabilize the market [23]. Policy and Future Outlook - The article suggests that the macroeconomic policies will continue to support stable economic growth, with a focus on high-quality development and structural improvements [27][28]. - The expectation for the second half of the year is positive, with ongoing support for consumption and investment policies [25][26].