Challenges and Prospects Emerge from China's November Data
Among the monthly data released this year, November likely warrants the most focus for assessing this year's economic performance and predicting future trends.
TroibNews 
**Editor's note:** Wang Jianhui is general manager of research and development at Capital Securities. The article reflects the author's opinions and not necessarily the views of CN.
Among the monthly data released this year, November stands out for its significance in assessing current economic performance and predicting future trends. This data provides critical insights into both the strengths and weaknesses of the economy and plays a crucial role in shaping upcoming policy measures, coinciding as it does with the annual Central Economic Work Conference. Consequently, it can be analyzed across various sectors, including financial institutions, investment, and the property market.
For the first eleven months of the year, total saving deposits in all financial institutions increased by 6.9 percent, a decline from 12.4 percent during the same period last year. Growth in deposits from households and non-financial companies slowed significantly, dropping from 14.9 percent and 5.2 percent to 10.4 percent and -2.4 percent, respectively. Considering the seven-day weighted-average interest rate, which fell from 2.27 percent to 1.78 percent, it appears that the current relaxed monetary policies are yielding positive effects, potentially allowing some funds to flow out of the banking system and into the real economy. However, a deeper analysis of monetary supply and loan data is necessary. M2 expanded by 7.1 percent, down from 10 percent the previous year. This reduced growth could raise concerns, particularly when viewed alongside M0, which is the fundamental source of credit creation and increased by 12.7 percent, up from 10.4 percent last year. Typically, M2 moves in tandem with M0, but the current divergence may suggest a weaker-than-anticipated credit-generating capacity. This insight aligns with November's loan data, which showed accumulated loan growth at 7.7 percent, a reduction from 10.8 percent, and a decrease in the share of loans within total social financing from 62.8 percent to 55.1 percent.
Accumulated fixed investments rose by 3.3 percent, a slight decline from 4.2 percent at the start of the year. Despite this seemingly modest result, it is relatively encouraging, as it represents an improvement from last year's figure of 2.9 percent and shows positive trends in various sub-sectors. Investment in the primary sector increased from -0.2 percent to 2.4 percent, signaling stronger supply and stable expectations for food prices. The secondary sector exhibited a growth rate of 12.0 percent, surpassing last year's 9 percent. Notably, private investment in manufacturing saw an increase of 11.4 percent for the first ten months of the year, 2.3 percentage points higher than the previous year. This data may help clarify the decline in bank deposits. However, the tertiary sector remained a weak point, with investment falling by 1.0 percent, continuing a downward trend over the past five months.
The property market is also undergoing changes, with accumulated sales by floor area down 14.3 percent in November. Compared to sales figures from the previous month and the start of the year, this decline narrowed by 1.5 and 6.2 percentage points, respectively, indicating a degree of stabilization. The price index for new and existing homes rose slightly to 93.93 and 91.46, up from 93.78 and 91.06 in the preceding month. As the market positively responds to significant policy changes implemented in the third quarter, expectations for further recovery and growth in the sector are building.
Considering these observations, we gain a clearer understanding of the key economic policy plans outlined during the Central Economic Work Conference. For example, the government has called for “moderately accommodating” monetary policies and “more proactive” fiscal measures, a shift from previous policies characterized as "prudent" and “moderately supporting.” This change suggests that the real economy may have access to a larger volume of affordable funds coupled with reduced taxes and fees, directly addressing credit creation challenges. The conference identified the property sector as a significant source of systemic risk, with promises of additional support measures, such as inventory reduction facilitated by local governments. Consequently, it is reasonable to anticipate that China's economy will continue to evolve, potentially becoming even more robust in the coming year.
Max Fischer for TROIB News
Among the monthly data released this year, November stands out for its significance in assessing current economic performance and predicting future trends. This data provides critical insights into both the strengths and weaknesses of the economy and plays a crucial role in shaping upcoming policy measures, coinciding as it does with the annual Central Economic Work Conference. Consequently, it can be analyzed across various sectors, including financial institutions, investment, and the property market.
For the first eleven months of the year, total saving deposits in all financial institutions increased by 6.9 percent, a decline from 12.4 percent during the same period last year. Growth in deposits from households and non-financial companies slowed significantly, dropping from 14.9 percent and 5.2 percent to 10.4 percent and -2.4 percent, respectively. Considering the seven-day weighted-average interest rate, which fell from 2.27 percent to 1.78 percent, it appears that the current relaxed monetary policies are yielding positive effects, potentially allowing some funds to flow out of the banking system and into the real economy. However, a deeper analysis of monetary supply and loan data is necessary. M2 expanded by 7.1 percent, down from 10 percent the previous year. This reduced growth could raise concerns, particularly when viewed alongside M0, which is the fundamental source of credit creation and increased by 12.7 percent, up from 10.4 percent last year. Typically, M2 moves in tandem with M0, but the current divergence may suggest a weaker-than-anticipated credit-generating capacity. This insight aligns with November's loan data, which showed accumulated loan growth at 7.7 percent, a reduction from 10.8 percent, and a decrease in the share of loans within total social financing from 62.8 percent to 55.1 percent.
Accumulated fixed investments rose by 3.3 percent, a slight decline from 4.2 percent at the start of the year. Despite this seemingly modest result, it is relatively encouraging, as it represents an improvement from last year's figure of 2.9 percent and shows positive trends in various sub-sectors. Investment in the primary sector increased from -0.2 percent to 2.4 percent, signaling stronger supply and stable expectations for food prices. The secondary sector exhibited a growth rate of 12.0 percent, surpassing last year's 9 percent. Notably, private investment in manufacturing saw an increase of 11.4 percent for the first ten months of the year, 2.3 percentage points higher than the previous year. This data may help clarify the decline in bank deposits. However, the tertiary sector remained a weak point, with investment falling by 1.0 percent, continuing a downward trend over the past five months.
The property market is also undergoing changes, with accumulated sales by floor area down 14.3 percent in November. Compared to sales figures from the previous month and the start of the year, this decline narrowed by 1.5 and 6.2 percentage points, respectively, indicating a degree of stabilization. The price index for new and existing homes rose slightly to 93.93 and 91.46, up from 93.78 and 91.06 in the preceding month. As the market positively responds to significant policy changes implemented in the third quarter, expectations for further recovery and growth in the sector are building.
Considering these observations, we gain a clearer understanding of the key economic policy plans outlined during the Central Economic Work Conference. For example, the government has called for “moderately accommodating” monetary policies and “more proactive” fiscal measures, a shift from previous policies characterized as "prudent" and “moderately supporting.” This change suggests that the real economy may have access to a larger volume of affordable funds coupled with reduced taxes and fees, directly addressing credit creation challenges. The conference identified the property sector as a significant source of systemic risk, with promises of additional support measures, such as inventory reduction facilitated by local governments. Consequently, it is reasonable to anticipate that China's economy will continue to evolve, potentially becoming even more robust in the coming year.
Max Fischer for TROIB News
