PBOC: M2 Stable at 8.6%, M1 Rises to 5.5%; Jan-May Social Financing Hits RMB 17.48 Trillion

On June 12, the People’s Bank of China released its May 2026 financial statistics report. In the first five months of 2026, aggregate social financing reached RMB 17.48 trillion, while RMB loans increased by RMB 9.11 trillion. At end-May, broad money supply (M2) grew 8.6% year-on-year, unchanged from the previous month, while the social financing stock expanded 7.7%, in line with economic growth and expected price level targets.

Since the beginning of this year, financial aggregates have maintained reasonable growth with relatively accommodative financing conditions. Authoritative experts noted that amid a complex and volatile external environment, China’s financial markets have demonstrated steady progress with notable resilience and vitality.

As bank loans alone increasingly fail to fully capture the financing support received by the real economy, combining loans with bond financing provides a more complete picture. Financial support for the real economy remains solid, and channels of money creation have become more diversified.

May Financial Aggregates Maintain Stable Growth

In the first five months, China’s social financing scale and M2 growth remained stable, with relatively accommodative financing conditions and solid financial support for the real economy. At end-May, narrow money supply (M1) grew 5.5% year-on-year, up 0.5 percentage points from the previous month. The narrowing M2-M1 gap suggests that corporate production and operations have become more active in recent months.

Lending rates remained at low levels. In May, the weighted average interest rate on newly issued corporate loans (domestic and foreign currency) was approximately 3%, down about 25 basis points year-on-year; the weighted average rate on newly issued individual housing loans was around 3.1%, down about 2 basis points year-on-year.

Banking system liquidity has been ample, with overnight money market rates hovering around 1.3%. “Monetary policy transmission has been relatively effective overall, and the quality and efficiency of financial support for the real economy continue to improve,” an authoritative source said.

Loan Growth Moderates Naturally, Credit Allocation Continues to Improve

In the first five months, RMB loan growth slowed to 5.6% year-on-year, down 0.2 percentage points from the previous month. Against the backdrop of a large outstanding loan stock and economic restructuring toward lighter industries, loan demand has naturally declined. Market institutions have broadly reached consensus on this trend.

By loan type, inclusive small and micro loans stood at RMB 37.95 trillion at end-May, up 10.2% year-on-year. Medium- and long-term loans to the services sector (excluding real estate) reached RMB 61.48 trillion, up 9.6%. These figures indicate that credit resources are flowing toward key areas and weak links in the economy.

Authoritative experts emphasized that with the deepening adjustment of social financing structure, the substitution of bank loans by other financing methods has become the norm. “This does not mean financial support for the real economy is weakening, but rather reflects economic transformation and upgrading as well as the diversified development of the financial system.”