China Q1 Finance Snapshot: M1 Surge & Bond Financing Rise — Analysts React on CNY Outlook (Apr 13)

I. Credit Growth Decouples from Economic Growth

Q1 2026 financial statistics show a notable weakening correlation between credit growth and economic growth. On April 13, the People's Bank of China released Q1 financial data showing that by the end of March, the broad money (M2) balance was 353.86 trillion yuan, up 8.5% year-on-year, 1.5 percentage points higher than the same period last year; the stock of aggregate financing to the real economy was 456.46 trillion yuan, up 7.9% year-on-year.

II. Bond Market Becomes Key Corporate Financing Channel

The aggregate financing to the real economy in Q1 totaled 14.83 trillion yuan, remaining at a historically high level for the same period. In the incremental aggregate financing, the proportion of RMB loans was 3.9 percentage points lower than the same period last year, while the proportion of corporate bond financing and stock financing both rose.

Corporate bond net financing was 1.05 trillion yuan in Q1, 521.3 billion yuan more year-on-year, more than doubling from the same period last year. The combined growth rate of loans and corporate bonds reached approximately 5.9% by end-March, outpacing loan growth alone by 0.2 percentage points.

III. M1 Growth Remains at High Level

M1 balance was 119.32 trillion yuan by end-March, up 5.1% year-on-year, remaining at a relatively high level in recent years. The M2-M1 spread has remained below 5 percentage points for 10 consecutive months.

IV. Loan Rates at Historic Lows

New corporate loan rates averaged approximately 3.1% in March, about 25 basis points lower than the same period last year. New personal mortgage rates averaged approximately 3.1%, about 6 basis points lower year-on-year.

V. Price Indicators Turn Positive

CPI and core CPI both maintained year-on-year growth of over 1% in March. PPI turned positive, rising 0.5% year-on-year and 1% month-on-month, the sixth consecutive month of positive growth.

Purchasing Managers' Index price indices showed clear upward momentum. Raw material purchase prices rose to 63.9% and factory gate prices climbed to 55.4%.