| OPINION
Improving the structure of social financing, a broad measure of funds raised by entities in the real economy, has always been a major issue in China's financial reform.
Effective control of new yuan-denominated loans and the expansion of credit bonds and trust indicate an improved structure of social financing. The process has been accelerating recently in China.
Statistics show that last year, the ratio of new yuan-denominated loans to total social financing amount was 58.22 percent. In the first 10 months of this year, the ratio fell to 55.53 percent. The ratios were 63.24 percent, 61.44 percent and 47.46 percent, in the first, second and third quarters, respectively.
In October, social financing became more active. Statistics released by the People's Bank of China (PBC) suggest that in October new yuan-denominated loans dropped to 505.2 billion yuan ($81.14 billion), a record low in the past 13 months and far less than the market expectation of 600 billion yuan ($96.36 billion), while social financing climbed to 1.29 trillion yuan ($207.17 billion). The ratio of yuan-denominated loans against social financing in October fell to a record low of 39.2 percent. Meanwhile, the proportion of trust, bill and corporate bonds rose to 40.5 percent, exceeding new yuan-denominated loans, which reflects a more balanced financing structure.
The PBC also plans to control the total new yuan-denominated loan amount between 8 trillion yuan ($1.28 trillion) to 8.5 trillion yuan ($1.37 trillion).
Spurred by deregulation and increased demand, the amount of credit bonds and trust underwent a significant rise. Market data from the Shanghai Stock Exchange show that since the beginning of this year, credit bonds—including short-term financing bills, medium-term notes and corporate bonds—have reached 2.94 trillion yuan ($472.16 billion), a sharp increase of 162.5 percent year on year.
Most of the issuers are government agencies and local enterprises in infrastructure investment like railways and expressways. The solid performance of credit bonds is based on constantly growing demand.
Since regulators have begun to loosen regulations over financial and assets management products, the demand for high-yield bonds has begun to surge.
Third-quarter figures from the China Trustee Association suggested that by September 30 the total amount of trust assets had registered 6.32 trillion yuan ($1.02 trillion), a year-on-year increase of 54 percent, hitting a record high. The size of the trust industry is almost the same as that of the insurance industry, China's second largest financial industry with a total asset of 6.9 trillion yuan ($1.11 trillion).
Overdependence on bank credit may lead to narrow channels of investment and financing, which will not only hinder the spread of risks, but also reduce the efficiency of capital utilization.
China's financial reform should focus on boosting the proportion of bonds, stocks and trust against social financing and enriching the sources of investment and financing.
For now, improving the structure of social financing is speeding up. As financial reform continues to deepen, deregulations accompanying the upgrading of financial innovation and the release of investment and financing demands will sustain the accelerated diversification of social financing.
This is an edited excerpt of a report by Anbound, a Beijing-based research company, published on the website of Caijing Magazine
THE MARKETS
Stockpiles of iron ore slid at 25 major Chinese ports during the week ending November 12, according to Xinhua's latest iron ore price report.
Inventories of imported iron ore at the ports stood at 97.43 million tons, down 480,000 tons from a week earlier. The price index for 63.5-percent-grade iron ore imports rose 1 point to 123 points during the period, while the index for 58-percent-grade imports also climbed 1 point to stand at 105 points.
In the first three quarters, given the gloomy economic climate both at home and abroad, domestic consumption of iron ore was growing slowly.
Import prices of iron ore were supported by speculations that the government may adopt more measures to bolster the slowing economy, and the prices will be relatively steady in the near-term with the consumption off-season approaching.
Amid the recovery of Beijing's real estate market, commercial property sales in the capital increased by over 30 percent year on year to 13.1 million square meters in the first 10 months, according to statistics released by the Beijing Municipal Bureau of Statistics.
Home sales in Beijing soared by over 45 percent year on year to 10.1 million square meters during the same period.
The sales surge comes as the city's property market continues to recover since May, when potential buyers snapped up bargains in the cooling market out of fears that housing prices would rise.
The buying was further boosted by two interest rate cuts since June, which reduced mortgage costs and strengthened market expectations that further loosening policies would trigger a stronger real estate market rebound.
NUMBERS
18.1 trillion yuan
The total amount of China's private fixed-asset investment from January to October, up 25.2 percent year on year.
8.07 trillion yuan
The amount of private fixed-asset investment in service industry from January to October, up 21.6 percent year on year.
3.65 trillion yuan
The amount of private fixed-asset investment in west China from January to October, up 29.5 percent year on year, the fastest among all regions.
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