Core Viewpoint - The People's Bank of China (PBOC) Shanghai Headquarters reported on the financial operation of Shanghai in the first half of 2025, highlighting the implementation of a moderately loose monetary policy to support high-quality economic development in Shanghai [2][3]. Financial Performance - In the first half of 2025, the total social financing scale in Shanghai increased significantly, with a stable growth in credit volume and a decrease in financing costs [3][4]. - By the end of June, the total balance of loans in Shanghai reached 12.85 trillion yuan, a year-on-year increase of 8.4%, which is 1.6 percentage points higher than the national average [4]. - Household loans increased by 13.7% year-on-year, with personal housing loan demand recovering [5]. - Non-financial enterprise loans accounted for 55.2% of the total new loans, indicating a strong demand from this sector [6]. Loan Structure and Costs - The loan structure has been optimized, with significant increases in loans to technology and inclusive finance sectors, with year-on-year growth rates of 28.9% for information technology and 19.7% for research services [7]. - The weighted average interest rate for newly issued corporate loans in June was 2.74%, down 49 basis points from the previous year, marking a historical low [8]. Deposit Trends - The growth rate of various deposits in Shanghai has slowed down, with total deposits reaching 22.9 trillion yuan, a year-on-year increase of 7.5% [10]. - Household deposits grew by 10.7%, while non-financial enterprise deposits increased by 4.8%, showing a slight improvement compared to the previous year [10][11]. Social Financing and Direct Financing - The increment of social financing in Shanghai was 841.8 billion yuan, a year-on-year increase of 324 billion yuan, effectively meeting the financing needs of the real economy [13]. - Direct financing saw significant growth, with net financing from corporate bonds reaching 102.6 billion yuan, an increase of 159 billion yuan year-on-year [13]. Foreign Economic Activity - Shanghai's foreign economic activity remained robust, with total foreign exchange receipts and payments amounting to 2.77 trillion USD, a year-on-year increase of 19% [14]. - The city's foreign trade income grew by 21%, demonstrating resilience amid external pressures [15]. Capital Market and Currency Use - The capital market's attractiveness has increased, with foreign investors showing renewed interest in RMB assets, leading to a net inflow into domestic stocks [17][18]. - The foreign exchange hedging ratio in Shanghai increased to 42.2%, reflecting enhanced awareness and capability among enterprises to manage currency risks [19]. Cross-Border RMB Business - The cross-border RMB settlement volume reached 16.2 trillion yuan, a year-on-year increase of 15%, maintaining a leading position nationally [19][20]. - The use of RMB in cross-border transactions is expected to grow, supported by favorable policies and the ongoing internationalization of the currency [20].

Core Insights - The continuous advancement of the "Belt and Road" initiative has significantly enhanced economic and financial cooperation between China and partner countries, particularly in cross-border RMB transactions [2][3] Group 1: Cross-Border RMB Transactions - In Q1 of this year, the cross-border RMB transaction amount between China and Malaysia reached 102 billion yuan, a year-on-year increase of 27% [2] - The cross-border RMB transaction amount with Cambodia was 5 billion yuan, growing by 45% year-on-year, with goods trade transactions amounting to 1.3 billion yuan, up 23% [2] - In the previous year, the total cross-border RMB transaction amount between China and Malaysia exceeded 300 billion yuan, ranking second among ASEAN countries, with a year-on-year growth rate of 29% [3] Group 2: Policy and Institutional Support - The People's Bank of China and Bank Negara Malaysia have closely collaborated to create a favorable policy environment for bilateral currency settlement, including signing a bilateral currency swap agreement in 2009 [2][3] - In 2023, a memorandum was signed to establish RMB clearing arrangements in Cambodia, with the Bank of China in Phnom Penh designated as the clearing bank [3][4] Group 3: Financial Services and Product Development - Bank of China (Malaysia) has expanded its service offerings, providing a comprehensive range of financial services, including credit, international settlement, trade financing, and cash management, to support Chinese enterprises in market expansion [3] - The Bank of China in Phnom Penh has launched new products, including direct exchange between RMB and Cambodian riel, enhancing settlement options and reducing currency exchange costs [4][5] Group 4: Future Outlook - The use of RMB in cross-border trade and investment is expected to broaden and deepen as China's foreign trade becomes increasingly diversified [5] - The People's Bank of China plans to continue improving policies for cross-border RMB usage, facilitating a more favorable environment for businesses engaging in cross-border trade and investment [5]