1、1Revelation of China Financial Data in JulyEntity economys lack of demand makes “house slaves” popular again on the contrary. The central bank published Chinas July financial data in mid-August， which obtained great concerns across the board. On one hand， the scissors differentials between M1 and M2
2、 has extended to 15.2%， hitting a new historical high， and poor performance of corporate loans has shown firms investment willingness have declined and the phenomenon of capital switching from entity economy to fictitious economy is still serious； on the other hand， the en- tire July RMB loans only
3、increased by 463.6 billion yuan with a Y-o-Y growth decline of 1.01 trillion yuan， but residents loans increased by 457.5 billion yuan and became the strong part of newly-added loans. Mr Zeng， Dean from Bank Research Office of Financial Institute of Chinese Academy of Social Sciences， said， “Residen
4、ts loans include consumption loans and personal business loans. The main proportion of consumption loans is housing loans.” 2Data released by the central bank also shows， the main contributor of newly-added loans is residents longterm loans with a new increase of 477.3 billion yuan， accounting for 1
5、02% of newly-added loans， hitting a new historical high. According to Mr Wang interpretation， the banking analyst from Guotai Junan Securities， residents long-term loans included housing mortgage loans， commercial housing loans， automobile loans， etc.， and housing mortgage loans made the main contri
6、bution. He said， “No matter the real estate market is good or bad， there remains the rigid demand for each month. So， long-term personal loans have kept relatively stable.” Declines of corporate loans are rarely seen， but it did happen in July. The freefall of July newly-added loans was related to t
7、he continuous slowdown of corporations demand for effective credit loans. The central bank data shows， long and medium term loans saw new addition of 151.4 billion yuan in July with a M-o-M growth fall of 259.1 billion yuan， short term loans saws declines of 201.1 billion yuan with a M-o-M growth fa
8、ll of 399.2 billion yuan. The fact that credit loans didnt perform well demonstrates that corporations had low willingness to invest. Mr Zong， Deputy Chief of International Financial Research Institute from 3Bank of China， commented that， “The enlargement of price scissors between M1 and M2 is relat
9、ed to capitals failure to go to fixed destinations.” According to Mr Shengs point of view， the situation of “deviating entity economy and switching to fictitious economy” has formed liquidity trap. He had previously expressed that， large quantity of newly-issued money failed to spur the economy rapi
10、dly， which means， enterprises didnt have effective investment and M2 was therefore not enhanced， the money was still on their current accounts. No matter they are SOEs， or private-owned enterprises， no matter they are in the over-capacity industry or in some new energy fields， the situation of holdi
11、ng money on their current accounts exists. Sources from Taiyuan I&S Group disclosed that， some coal enterprises had deposits of as high as several billion yuan and Taiyuan I&S Group deposit this year was around 1 billion yuan higher than previous years. “In the past， coal enterprises didnt need to r
12、eserve capital in advance and loans transfer at the expiry date would work. But this year， default events concerning corporate bonds happened again and again， coal enterprises debts reached as high as tens of billion yuan， 4and they had to cumulate capital to ease off repayment pressure.” New energy
13、 industries couldnt escape such fates either. One state-owned large new energy company in Central China expanded its investment scale of photovoltaic power and winder power stations last year， and its layout of main businesses wasnt slowed down. But this year， most of its idle fund was spent as debt
14、 repayment. Mr Zong from Bank of China said， “Even if companies did invest， it was not about entity investment but financial investment， preferably shortterm investment.” If a group owns a finance company， it will do some valueadded short term investment in interbank markets， but this year， the yiel
15、d rate fell obviously from previous years. Industry expert said， monetary policy is effective but limited， and financial policies are needed to coordinate. Financial policies mainly should be lowering corporate tax burden and enhancing fiscal deficit ratio. The central bank data shows， newly-added l
16、oans reached 477.3 billion yuan in July and housing mortgage loans became the main contributor. Residents long-term loans accounted for 102% of newly-added loans， hitting a new historical high. The 5last historical high was at 77% in April. Chief researcher from China Min- sheng Bank expressed that，
17、 this shows that demand for retail loans mainly in the means of mortgage loans is still strong. Macro researcher Mr Li from Huatai Securities said， residents house purchase activities supported by increasing leverage propped up credit loans increases in July， but infrastructure loans saw rapid decli
18、nes. Li said， “Since the beginning of the year， real estate and infrastructure loans have been the main force that keeps average newly-added RMB loans at high rate.” Residents housing loans stay around 500 billion yuan per month and the volatility is small； in previous years， loans were only over 30
19、0 billion yuan per month. This is mainly because house price keeps increasing and house purchasing leverage is intensified. Private capital proved to be more sensitive. Take Beijing for example， during the first four months of 2016， around 80% of private capital entered the real estate market， which
20、 means structural reforms and transformations need strengthening. Mr Chen， Senior researcher from Financial Research Center of Bank of Communications， holds that ， as the real estate heat faded away， even if local governments launched policies 6of purchase restriction and loan restriction， the July
21、housing loans didnt see immediate effect as the actual implementation of new policy needed more time. Differentiation of credit loan demand structure of residents and corporations has been somewhat intensified. As regulation and control restart， under new housing policies in Shanghai， Shenzhen and Y
22、angtze River Delta regions as well as supervision focusing on de-leveraging， will the momentum of housing loan increases at the next phase will continue？ And real estate leverage has been added to the extremity？ Residents long term loans increased by 47.73 billion yuan. It ap- peared to be higher th
23、an the entire newly-added loans of that month， but actually， its growth reduced by 8.66 billion yuan， which shows the house pur- chase heat has faded and the real estate investment faces challenge. Relevant data also supports this forecast from the side. Real estate investment related data from Jan
24、to July released by NBS（National Bureau of Statistics） shows， investment in Chinas real estate development from Jan to July reached 5.53 billion yuan with a Y-o-Y nominal increase of 5.3%， down 0.8% from that from Jan to June. Besides， land sizes bought by real estate developers 7had also slid. From Jan to July， developers land purchase size reached 111.67 million square meters with a Y-o-Y decline of 7.8%.
