〔Day Digest〕Corporate Loan Rates Slip Below 3% While July RMB Loans Fall ¥340B – PBOC's ¥1.35T Liquidity Push Sends 10Y to 1.68% Low

0. Weekly Arc

• July credit data flashed a price signal: new corporate loan rates sat just under 3.0%, down ~0.2pp y/y, while January-July aggregate social financing reached ¥22.25 trillion ^[1][2]. The volume side, however, flipped negative: July RMB loans fell ¥340 billion ^[3]. The PBOC responded with ¥1 trillion of 6-month outright reverse repos plus a ¥349 billion overnight operation, pulling the 10-year CGB yield down 1bp to 1.68%, its lowest since July 2025 ^[4]. Net: Beijing is asking markets to watch rates, not scale ^[1][5].

1. Policy Narrative

• [ESCALATED] An "authoritative expert" cited by PBOC-aligned media says the rate is the basic signal of credit supply-demand balance; persistently lower rates imply supply is meeting demand and policy is "moderately loose" ^[1][5].
• [NEW] Supporting comparisons: policy rates have fallen a cumulative 1.15pp over this easing cycle, while average corporate loan rates dropped ~2.6pp; even in the US zero-policy-rate era, average loan rates were ~4.3% ^[1][5]. The same expert argues China should "not need to focus too much on scale growth" because M2 as a share of GDP is already high ^[1].
• [NEW] PBOC and SAFE extended cross-border cash pooling for multinationals nationally, with lower entry thresholds for host companies in free trade zones ^[6][7].
• Source caveat: this framing is anonymous, so the policy signal cannot be tied to a named official ^[1][5].

2. Credit and Money Data

• [NEW] End-July: M2 ¥355.51 trillion (+7.7%), aggregate social financing stock ¥463.27 trillion (+7.4%), RMB deposits ¥346.47 trillion (+8.1%), RMB loans ¥282.29 trillion (+5.1%) ^[8][9].
• [NEW] January-July aggregate social financing rose ¥22.25 trillion, ¥1.74 trillion less than a year earlier; RMB loans added ¥10.38 trillion ^[9]. July alone saw social financing +¥1.41 trillion and RMB loans –¥340 billion ^[3].
• [NEW] M1 grew 4.0% and the M2-M1 spread narrowed to 3.7pp from 4.0pp at end-June ^[3].
• [NEW] Financing mix shifted: loans were 45.7% of January-July aggregate social financing, while bonds and equity reached 48.02%, and corporate bond rates were around 1.8% ^[2].
• Expert guidance: the M2/social financing gap and deposit/loan growth gap carry "no clear policy implication" and should not be read as idle funds ^[8].

3. Liquidity, Rates and Supply

• [ESCALATED] On August 14 the PBOC conducted ¥1 trillion of 6-month (185-day) outright reverse repos maturing February 15, 2027, an equal rollover, and ¥349 billion of overnight reverse repos – the first mid-month overnight operation since Governor Pan Gongsheng's June Lujiazui Forum pledge to enrich short-term tools; net injection after a ¥10 billion 7-day maturity was ¥348 billion ^[4].
• [NEW] The 10-year CGB yield fell 1bp to 1.68%, the lowest since July 2025; bond futures closed up across tenors: 30Y +0.09% to 116.390, 10Y +0.06% to 109.540, 5Y +0.05% to 106.615, 2Y +0.01% to 102.636 ^[10][4].
• [NEW] Supply ahead: the MOF will reopen the 5-year fixed-coupon CGB (coupon 1.40%) and the 2-year fixed-coupon CGB (coupon 1.21%), each with ¥140 billion in competitive bidding face value, on August 21 ^[11][12]. The MOF and PBOC also scheduled 1-month ¥70 billion and 3-month ¥100 billion central treasury cash management deposits for August 19 ^[13][14].

4. External and Real Economy

• [NEW] H1 current account surplus was ¥2.6174 trillion, with a capital and financial account deficit of ¥2.6439 trillion (including Q2 net errors and omissions); Q2 current account surplus was ¥1.3337 trillion and inbound direct investment stayed positive ^[15][16].
• [NEW] Shanghai imports and exports reached ¥3 trillion in January-July, +17.7%; July alone ¥447.57 billion, +12.6%, the 18th consecutive monthly increase ^[17].
• [NEW] "China Travel" demand: Hangzhou received over 270,000 inbound foreign visitors through August 14, +12% y/y, with visa-free arrivals over 160,000, +20% y/y, led by Korea, Vietnam, Singapore and Malaysia ^[18].
• [NEW] Regional programs: Sichuan's 15th Five-Year urban renewal plan targets ~60,000 dilapidated houses, 8,000 old communities, 420 village-in-city redevelopment projects (100,000 households) and 59,000 km+ of pipelines ^[19].
• [NEW] Commodity and energy prints: live hogs (outer ternary) were ¥10.4/kg in early August, flat m/m; July new-energy vehicle sales reportedly exceeded 60% of new car sales for the first time, and Shanghai will support private capital in rail and nuclear projects ^[20][21].
• [NEW] CNH HIBOR was mostly lower: overnight 1.37697%, 1-week 1.42697% (highest since August 5) ^[22]. Deputy Governor Zou Lan attended the BRICS FMCBG meeting in Jaipur on August 12-13 ^[23].

5. What Would Falsify the Read

• [ONGOING] The price-based "adequate supply" thesis relies on unnamed experts, so it is not independently attributable ^[1][5][8].
• July's RMB loan contraction is the main counter-signal; August credit flows will show whether it was an anomaly or the new trend ^[3].
• The liquidity-driven fall in the 10Y yield to 1.68% now meets a heavy supply test from August 21 reopenings and August 19 treasury cash-management deposits ^{[13][14][11][12][4]}.
• If loan volumes recover and rates stabilize, the new narrative will be premature; if rates keep falling, volume weakness will matter even less ^[3][4].