August Finance & Economy Data: Key Signals Revealed

At present, in China's public opinion environment and on the internet, one of the most difficult yet equally crucial tasks is the observation and interpretation of economic and financial data.

Even more challenging is to engage in discussions and analyses.

Why do we say this?

It's simple: the data performance and corresponding signals are not easy to put on the table and speak bluntly about.

Generally speaking, there are three types of interpretations of economic and financial data that are visible to the mainstream: The first type is interpretations by leaders of relevant national departments in the form of press conferences.

In accordance with China's long-term pursuit of stable and harmonious economic management, such interpretations, if not specialized or well-versed in national management, are mostly seen as positive.

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Here is an excerpt from the latest official statement, with growth everywhere and an atmosphere of "stability and improvement": The second type is the interpretations and analysis content from securities firms and financial institutions.

This content is generally uniform and difficult to understand, filled with jargon and data charts, mainly following a routine of "if I don't understand it myself, I'll confuse the reader".

Not to mention that ordinary people can't see any meaningful content or viewpoints, even those who are specialized may be in the dark.

The third type is more subtle, mainly consisting of unofficial opinions and views from private individuals, economic hobby groups, and ordinary people.

Among them, there are some insightful views, but they either lack traffic or are very susceptible to censorship.

Looking back at the latest data released by the National Bureau of Statistics and the central bank in mid-September 2024, it's not easy to analyze and discuss openly.

Therefore, this article takes a different approach, based on an objective and detailed combing of the latest published statistical data, combined with several current realities of the domestic economic environment.

It starts from respecting common sense and rules, and deeply explores the signals corresponding to the data, and conducts an in-depth, attitude-based, and evidence-based special combing and analysis and discussion of several possible trends and changes in the subsequent domestic economic environment in China.

Laymen watch the excitement, focusing on emotional value; professionals watch the strategy, focusing on strategic value.

Under the background of a managed environment, emotions are the most meaningless things.

On September 13th, the central bank released financial data for August.

The monthly financial statistics published by the central bank, the framework and core are actually four key data every month: social financing, loans, deposits, and another is the situation of monetary circulation (M1, M2).

To be honest, the financial data situation in August is not optimistic.

Let's look at the data to see the situation: First is social financing: In August 2024, social financing increased by 302.98 billion yuan, an increase of 225.74 billion yuan month-on-month.

After the low performance in July, it rose again in August, but it was still 98.1 billion yuan less year-on-year.

The increase of 3.03 trillion yuan in social financing in August is a good performance, but there is still not much participation from private enterprises.

The increase is more than half of the official direct liabilities, and the other half is mostly state-owned enterprises.

The decrease in the year-on-year growth rate of social financing is lower than that of credit, mainly due to an increase of 437.1 billion yuan in government bonds year-on-year.

Among them, the net financing of local special bonds in August was about 700 billion yuan, a new high for a single month this year, higher than the 650 billion yuan of the same period last year.

The characteristic of the national government as the main body of the economy to increase leverage is obvious.

However, enterprises and households still maintain a "deleveraging trend".

Secondly, looking at the situation of deposits and loans, there are several details worth noting: 1.

The loans of the people almost did not increase in August, and the prepayment of loans is still like a tide.

"The increase of long-term loans for residents is 131 billion yuan", unfortunately, that is only for the first eight months, and there is only an increase of 0.12 trillion yuan in August.

The demand for loans from the resident sector is lower than the demand for deleveraging.

2.

Looking at the type of bank, the loans of large banks in August were 23.25 billion yuan less than the same period last year, and the loans of small and medium-sized banks were 19.33 billion yuan less than the same period last year, both of which were relatively weak.

The short-term loans of large banks were 28.88 billion yuan less than the same period last year, and the decline was higher than that of small and medium-sized banks of 6.25 billion yuan, mainly due to the impact of manual interest subsidy cleaning; the bill financing of large banks increased by 20.55 billion yuan year-on-year, while small and medium-sized banks decreased by 1.4 billion yuan year-on-year, showing that state-owned large banks may be the main body of bill volume.

The state-owned large banks bill volume to do data, the performance of financial empty turn is very obvious and clear.

3.

The enthusiasm for corporate loans is insufficient: The credit data in August continued the weakness since the second quarter, and only the main items of bill discounting increased year-on-year, and the other items were all less than the same period last year.

Among them, the residents' loans were 20.22 billion yuan less than the same period last year, which is consistent with the low sales and consumption of housing in August; the short-term and long-term loans of enterprises were 14.99 billion yuan and 15.44 billion yuan less than the same period last year respectively, mainly due to the continuous impact of cleaning manual interest subsidies and the continuous impact of capital empty turn loans, as well as the weak demand for investment in infrastructure and manufacturing.

Corporate financing continues to weaken.

4.

The monthly change of residents' deposits is worth paying attention to.

In the first seven months of 2024, the total amount of RMB deposits still achieved a significant increase of 106.6 billion yuan, of which the residents' deposits increased by 89.4 billion yuan, showing the strong willingness of Chinese people to save.

However, if this data is compared with the 92.7 billion yuan of new residents' deposits in the first half of this year (the first six months), it is not difficult to find that the deposits decreased by 33 billion yuan in one month.

So, where did the "disappearing" 33 billion yuan of deposits go?

Did they quietly enter the stock market, funds and other high-risk and high-return investment channels, or did they turn into a trickle of the consumer market?

Think from another angle, under the condition of the synchronous decline of M1, is this 33 billion yuan not in the hands of the resident sector at all?

A shares and the real estate market are not good, direct financing and RMB loans are very poor, relying on government bonds to support, I don't know how much can be supported.

Finally, the most important monetary circulation situation statistics: the biggest highlight is the fifth time to witness history, at the end of August 2024, M1 balance 63.02 trillion, year-on-year growth rate decreased by 7.3%, the decline is 0.7 percentage points larger than June, and it has been negative for five consecutive months; since there are data, there have been only six times in history when M1 has declined, the first time was in January 2022, the second time was in April 2024, the third time was in May 2024, the fourth time was in June 2024, the fifth time was in July 2024, this is the sixth time, and it is also the largest decline in history.

M1 continues to decline, not only year-on-year, but also month-on-month, and the total amount has fallen to 63.02 trillion.

This is the most important data performance and change trend in the current domestic financial data, which is worth paying attention to.

The economic reality significance of M1 does not need to be explained more, right?

Previous articles have written many times.

The current performance and change trend of M1 are actually very close to the domestic economic reality and the economic body feeling of many people, that is, the money is tight.

The corresponding economic signal is also very clear, and there is no dispute: looking at the experience and history of countries and economies with M1 or similar data statistics in the world, there has never been a situation where the increase in M1 is negative and the downward trend can have an economic boom, asset rise, and financial expansion.

This is completely speaking from the law and experience, not too much, not too little, not blowing, not black.

M1 contraction and downward, corresponding to the economic activity, market confidence and expectations are low.

The signal corresponding to the data is clear at a glance.

On September 14th, the National Bureau of Statistics released the economic data for August.

The economic data for August has been released, and the core data is as follows: the data of the three driving forces of economic development are all above, how do you feel?

Objectively speaking, for the economic data in August, there is not much expectation for the environment or the market, and looking at the actual economic body feeling in the country, the only expectation is not too bad.

First look at consumption: In August, the growth rate of social retail consumption slowed down to 2.1%, and car consumption is still the negative pull of social retail consumption.

Since this year, the car market has been continuously devaluing, and the sales performance is not as expected.

After two years of promoting consumption policies, the growth rate of residents' car consumption has been overspent, and the consumption of car social retail in August continued to decline.

Subsequently, it is necessary to continue to pay attention to the implementation effect of related consumption subsidy policies at the local level from the end of August to the beginning of September.

Then look at the characteristics of the data: >Consumption end: Falling again; The growth rate of consumption of home appliances, clothing, communication equipment rebounded, and the growth rate of consumption of furniture, building materials, beverages fell a lot; >Investment end: The price of land quantity is stable and falling, the high position of manufacturing slows down, and the infrastructure falls again; >Supply end: Industrial production has slowed down for four consecutive months, and the production of the service industry has also slightly declined; >Employment end: The unemployment rate has risen slightly, mainly due to the graduation season, and it should also be related to the increased economic pressure.

Overall, the economic data and reality in August are still in a marginal downward trend, which is not much dispute.

Finally, the biggest highlight of the economy in August is import and export: Among all the data in August, only exports are relatively strong, and consumption, investment, industrial production, etc.

have slowed down to varying degrees.

Other data such as PMI, PPI, M1, and high-frequency data are also generally weak.

Overall, whether it is export, price or economic data, or financial data, it shows that there has been no inflection point in the basic situation in August.

At present, the market has a high consensus on the direction of domestic demand, and the lack of confidence and expectations in the economic environment is obvious.

The continuous contraction of the domestic economic environment continues, and there is a lack of clear main lines and channels with a money-making effect in the economic environment.

Confidence and expectations are low, conservative, and defensive.

It is worth noting that the increase in foreign trade has not brought obvious economic driving effects to the country, which is very important.

Combined with the market expectation and consensus of the Federal Reserve's interest rate cut in September, as well as the uncertainty of the U.S. election, there is reason to regard this situation as the country being restrained, holding the bullet in hand, and preparing for some potential shocks and fluctuations.Here is the translation of the provided text into English: "Let's carefully consider the economic logic at play here: The country is making money, but there is domestic austerity.

Are the departments and leaders who dominate the nation's wealth waiting for something?

Or are they preparing for the arrival of something?

The data and the corresponding real-world logic have been clearly stated above.

There's no room for emotion, nor is there a need for any particular attitude.

Facing the facts is what matters.

However, the economy is not something that can be explained by cold, hard data alone.

Instead of being swept away by emotional data, it's better to start from a perspective of respecting the laws and logic to see some possible changes in the future.

Currently, China's domestic economy is under considerable downward pressure, with insufficient demand being the core constraint.

The annual goal of 'maintaining 5%' urgently requires policies to 'sustain effort and be more effective.'

In terms of monetary policy, easing is still the general direction, and there is a high probability of further reserve requirement ratio cuts and interest rate reductions.

It is also very likely that the interest rates on existing mortgages will be adjusted downward.

This is the logic of cause and effect.

The logic is certain, and the key lies in the timing.

Several rational assessments: First, in the short term, there is insufficient room and imagination for the national will and policy dimension to adjust and reverse the domestic austerity situation, mainly constrained by the Federal Reserve's interest rate cuts and a series of trade strategies targeting China for political purposes.

Second, the Federal Reserve's interest rate cut in September carries too many uncertainties.

Whether it's a feint, a pretense, or the official start of easing, it's impossible to grasp certainty from just one or two policy adjustments.

Such high-stakes gambling is something China cannot afford to lose, and stability and safety are definitely the top priority.

The core focus should be on when the inversion of the yield gap between Chinese and U.S. government bonds can be reversed, which is crucial.

Third, in the future, China's credit easing, monetary policy stimulus, and economic stimulus will still need to focus on infrastructure and real estate.

There is no dispute about this; only when infrastructure and real estate pick up can it be said that money has entered the economic environment, and the domestic austerity situation can be said to have been reversed.

As for the stock market, because bank stocks, which account for a significant weight, do not have much positive stimulus during the easing cycle, there will only be opportunities for short-term rotation and speculative speculation.

Fourth, before some key certainties emerge in this round of China-U.S. competition, do not expect too much from China's national level to introduce new economic policies and make significant adjustments.

On the contrary, it is more likely that the process will be externally relaxed and internally tight, with a focus on internal risk removal and maintaining a defensive posture.

In summary, it is necessary to actively adapt to the current austerity and pressure and have a mindset and understanding for a 'prolonged war.'

Sometimes bad data may not lead to bad outcomes; the story of the old man who lost his horse is a clear example.

Naturally, it is hoped that further measures will be introduced, and the economy will also rebound accordingly.

Or, shifting from a continuous downward and tightening trend to a relatively stable operation is also good.

An important economic law to share: the phase of austerity and pressure in the economic environment is often the inevitable prelude to a rapid clearing of assets and financial markets.

In 1862, the Frenchman Clément Juglar published his research on economic fluctuations.

Juglar, a master of economic cycle research, was completely different from previous studies on economic crises.

He was the first to recognize that regular economic crises are not a series of independent events but manifestations of cyclical recurrence.

He wrote in his book: 'The only cause of depression is prosperity.'

He believed that the absence of depression is precisely because something has gone wrong, and depression indicates that the economy is on a normal operating track.

Such a view is actually very appropriate for the current domestic economic environment.

After all, for all Chinese people at present, they have not experienced a truly complete economic cycle.

Therefore, the emergence of many viewpoints, emotions, and attitudes is understandable but has no practical significance.

From the perspective of ordinary individuals, seeing the reality and cycle, adapting to trends to choose the best strategy, and ultimately achieving a smooth transition through cycles and fluctuations, is it not more meaningful and valuable?

In conclusion, based on the above analysis and interpretation of the latest economic and financial data, I would like to share a few personal thoughts, opinions, and suggestions.

They may not be correct, but they serve as a starting point for discussion and reference: In such a stage, a defensive posture and a cautious attitude are one of the most basic survival cognitions.

Heaven and earth are ruthless, treating all things as straw dogs.

The flood of cycles and the tide of trends will not change because of the emotions and attitudes of individuals or even groups.

Adaptation, compliance, and acceptance are the only ways to achieve survival and sustainable development.

Many times, whether it is an individual, a company, or an industry, it is all about 'breathing a breath of life.'

Simply put, people always need a hope to support and inspire them to get through special stages and challenges.

Pessimistic and negative people, no matter how right they are, will always be eliminated and washed away by the tide of the times; optimistic and positive people, with hope, no matter how hard it is now, can often become the lucky ones who get through the cycle.

Being defeated by the present is the most unworthy, and in a downward cycle, do not expect any good opportunities for a quick turnaround.

Such a view may resonate with friends who have some life experience.

The above is a special analysis and in-depth interpretation of the latest official financial and economic data released in September 2024."