Summary of Key Points
This article analyzes the capital flows of residents and enterprises (the real sector) from January to July 2026: The overall amount of funds is sufficient, but the growth rate slowed significantly in June and July. Enterprises prefer to issue bonds for financing due to low interest rates, while loans and fiscal spending have been holding back the economy. The pace of residents "moving their deposits" (transferring their savings to financial products) has slowed down in June and July, but the overall trend remains unchanged; funds are still primarily circulating within the financial system and not flowing much into the real economy.
1. Overall Funds: More Saved in the First Five Months, Slower Growth in June and July
In the first seven months, the real sector received a total of 20.4 trillion yuan in funds, an increase of over 130 billion yuan compared to the same period last year and 3.4 trillion yuan more than in 2024, indicating an ample amount of capital. However, the total for June and July was only 4.43 trillion yuan, 1 trillion yuan less than in the same period last year—meaning that most of the growth came in the first five months, with slower funding in the recent two months.
Why is it important to look at June and July together? At the end of June, there is a mid-year settlement period, during which companies need to reconcile accounts, banks are evaluated, and the government adjusts its revenue and expenditure, leading to larger fluctuations in monthly data. Combining these two months provides a more accurate picture.
2. Sources of Funds: Enterprises Prefer Bond Financing, While Credit and Fiscal Spending Lag
- Corporate Bonds as a Highlight: Enterprises issued 854.8 billion yuan in bonds in June and July, an increase of 337.8 billion yuan compared to last year. With low interest rates, borrowing through bonds is cheaper than taking out loans, and it also allows companies to repay older bonds with higher interest rates.
- Weak Credit and Fiscal Spending: Loans remain sluggish, with enterprises being reluctant to borrow. Fiscal spending in June and July was only 1.48 trillion yuan, 830 billion yuan less than last year, reducing its proportion from 42.3% to 33.3% of the total funding.
- Support from Exchange Rate Gains, but with Slowing Growth: The net exchange of foreign currency for yuan increased by 187 billion yuan, but this growth has also slowed down as the yuan's exchange rate has stabilized.
These factors combined result in a smaller increase in funds in June and July compared to last year.
3. The Trend of Residents Moving Their Deposits: Slowing Down, but Continuing
"The trend of residents moving their deposits" refers to the act of withdrawing savings from banks and investing in financial products such as funds and stocks.
- Accelerated in May, Slowed in June and July: In May, residents even had a net decrease of 109.6 billion yuan in deposits as they invested in financial products. In June and July, however, new deposits amounted to 1.32 trillion yuan, similar to last year, although the amount invested in financial products was 950 billion yuan less, indicating a slowdown in the pace of this trend.
- But the Trend Remains Unchanged: Despite the slowdown, 60% of the new funds in June and July went towards financial investments, with money still circulating within financial institutions such as banks and fund companies, rather than being used for the real economy (e.g., for enterprise expansion or consumer spending).
4. Three Reasons for the Slowing Down of the Trend
There are three main reasons for the recent slowdown in this trend:
- Stock Market Volatility: The stock market was unstable in June and July, making residents more cautious about investing, even in stable financial products.
- Fewer High-Yield Deposits Maturing: Many high-interest fixed-term deposits matured in the first half of the year, and residents needed to find new places to invest their money, but there were fewer such deposits maturing recently.
- Return of Large-Dollar Time Deposits: Major banks have resumed offering 5-year large-dollar time deposits with decent interest rates, prompting residents to opt for these long-term investments rather than other options.
5. Future Trends: The Trend of Residents Moving Their Deposits Will Not Stop, and Banks Need to Adapt
Although the current pace of capital movement has slowed down, it is unlikely to reverse in the long term, as deposit interest rates continue to decline. Residents will naturally seek products with higher returns.
This situation presents a challenge for banks: Deposits will continue to decrease, and loans will not increase significantly (since enterprises are less willing to borrow). The traditional model of earning profits through the interest rate difference between deposits and loans is no longer viable. Banks will need to find new ways to generate revenue, such as providing wealth management services and selling financial products.
In summary, there is plenty of capital available, but less of it is flowing into the real economy. Residents are gradually shifting their savings to financial products, and although the pace has slowed, the overall direction remains the same. Banks must adapt to new methods of generating income.