According to preliminary statistics from the People's Bank of China, China's aggregate financing to the real economy (AFRE) increased by 18.63 trillion yuan from January to May, compared to 16.3429 trillion yuan from January to April. New RMB loans reached 10.68 trillion yuan from January to May, lower than the estimated 10.9597 trillion yuan but higher than the 10.0597 trillion yuan from January to April. As of the end of May, the balance of broad money (M2) stood at 325.78 trillion yuan, up 7.9% YoY. The balance of narrow money (M1) was 108.91 trillion yuan, up 2.3% YoY. The balance of currency in circulation (M0) was 13.13 trillion yuan, up 12.1% YoY. Net cash injection in the first five months amounted to 306.4 billion yuan. Financial Statistics Report for May 2025 I. Broad Money Grew by 7.9% As of the end of May, the balance of broad money (M2) stood at 325.78 trillion yuan, up 7.9% YoY. The balance of narrow money (M1) was 108.91 trillion yuan, up 2.3% YoY. The balance of currency in circulation (M0) was 13.13 trillion yuan, up 12.1% YoY. Net cash injection in the first five months amounted to 306.4 billion yuan. II. RMB Loans Increased by 10.68 Trillion Yuan in the First Five Months As of the end of May, the balance of RMB and foreign currency loans was 270.2 trillion yuan, up 6.7% YoY. The balance of RMB loans was 266.32 trillion yuan, up 7.1% YoY. RMB loans increased by 10.68 trillion yuan in the first five months. By sector, household loans increased by 572.4 billion yuan, including a decrease of 262.4 billion yuan in short-term loans and an increase of 834.7 billion yuan in medium and long-term loans. Loans to enterprises (institutions) increased by 9.8 trillion yuan, including an increase of 3.14 trillion yuan in short-term loans, 6.16 trillion yuan in medium and long-term loans, and 364.5 billion yuan in bill financing. Loans to non-banking financial institutions increased by 135.7 billion yuan. As of the end of May, the balance of foreign currency loans was $539.4 billion, down 16.3% YoY. Foreign currency loans decreased by $2.7 billion in the first five months. III. RMB Deposits Increased by 14.73 Trillion Yuan in the First Five Months As of the end of May, the balance of RMB and foreign currency deposits was 324.08 trillion yuan, up 8.3% YoY. The balance of RMB deposits was 316.96 trillion yuan, up 8.1% YoY. RMB deposits increased by 14.73 trillion yuan in the first five months. Specifically, household deposits increased by 8.3 trillion yuan, non-financial corporate deposits decreased by 7.3 billion yuan, fiscal deposits increased by 2.07 trillion yuan, and deposits of non-banking financial institutions increased by 3.07 trillion yuan. As of the end of May, the balance of foreign currency deposits was $990.1 billion, up 19% YoY. Foreign currency deposits increased by $137.2 billion in the first five months. IV. The Monthly Weighted Average Interbank Offered Rate and Pledged Bond Repo Rate in the RMB Interbank Market in May Were 1.55% and 1.56%, Respectively In May, the total turnover in the RMB interbank market through interbank lending, cash bonds, and repos was 167.2 trillion yuan, with a daily average turnover of 8.8 trillion yuan, up 14.9% YoY. Among them, the daily average turnover of interbank lending decreased by 8.6% YoY, the daily average turnover of cash bonds increased by 5% YoY, and the daily average turnover of pledged repo increased by 19.1% YoY. In May, the weighted average interest rate of interbank lending was 1.55%, which was 0.18 percentage points and 0.3 percentage points lower than the previous month and the same period last year, respectively. The weighted average interest rate of pledged repo was 1.56%, which was 0.16 percentage points and 0.26 percentage points lower than the previous month and the same period last year, respectively. V. In May, the cross-border RMB settlement amount under current accounts was RMB 13.1 trillion, and the cross-border RMB settlement amount under direct investment was RMB 6.1 trillion. In May, the cross-border RMB settlement amount under current accounts was RMB 13.1 trillion, including RMB 9.9 trillion for trade in goods, RMB 3.2 trillion for trade in services, and other current accounts; the cross-border RMB settlement amount under direct investment was RMB 6.1 trillion, including RMB 2 trillion for outward direct investment and RMB 4.1 trillion for foreign direct investment. Report on Statistical Data of the Stock of Social Financing Scale in May 2025 Preliminary statistics showed that the cumulative increment of the social financing scale in the first five months of 2025 was RMB 186.3 trillion, an increase of RMB 38.3 trillion compared with the same period last year. Among them, RMB loans issued to the real economy increased by RMB 103.8 trillion, up RMB 112.3 billion YoY; foreign currency loans issued to the real economy, converted into RMB, decreased by RMB 96.3 billion, with a larger decrease of RMB 169 billion YoY; entrusted loans decreased by RMB 11.3 billion, with a smaller decrease of RMB 80.2 billion YoY; trust loans increased by RMB 62.7 billion, with a smaller increase of RMB 172.3 billion YoY; unaccepted bankers' acceptances increased by RMB 134.3 billion, up RMB 166.2 billion YoY; net corporate bond financing was RMB 908.7 billion, a decrease of RMB 288.4 billion YoY; net government bond financing was RMB 6.31 trillion, up RMB 3.81 trillion YoY; and domestic equity financing by non-financial enterprises was RMB 150.4 billion, up RMB 44.4 billion YoY. Report on Statistical Data of the Stock of Social Financing Scale in May 2025 Preliminary statistics showed that the stock of the social financing scale was RMB 426.16 trillion at the end of May 2025, up 8.7% YoY. Among them, the balance of RMB loans issued to the real economy was RMB 262.86 trillion, up 7% YoY; the balance of foreign currency loans issued to the real economy, converted into RMB, was RMB 1.19 trillion, down 31.5% YoY; the balance of entrusted loans was RMB 11.22 trillion, up 0.4% YoY; the balance of trust loans was RMB 4.36 trillion, up 5.4% YoY; the balance of unaccepted bankers' acceptances was RMB 2.27 trillion, down 7.4% YoY; the balance of corporate bonds was RMB 32.91 trillion, up 3.4% YoY; the balance of government bonds was RMB 87.39 trillion, up 20.9% YoY; and the balance of domestic equity of non-financial enterprises was RMB 11.87 trillion, up 2.9% YoY. In terms of structure, the balance of RMB loans issued to the real economy accounted for 61.7% of the outstanding social financing stock in the same period at the end of May, down 1 percentage point YoY; the balance of foreign currency loans issued to the real economy, converted into RMB, accounted for 0.3%, down 0.1 percentage point YoY; the balance of entrusted loans accounted for 2.6%, down 0.3 percentage point YoY; the balance of trust loans accounted for 1%, down 0.1 percentage point YoY; the balance of undiscounted bankers' acceptances accounted for 0.5%, down 0.1 percentage point YoY; the balance of corporate bonds accounted for 7.7%, down 0.4 percentage point YoY; the balance of government bonds accounted for 20.5%, up 2.1 percentage points YoY; and the balance of domestic stocks of non-financial enterprises accounted for 2.8%, down 0.1 percentage point YoY. Recommended readings: 》PBOC: Social financing increased by 16.34 trillion yuan, new loans increased by 10.06 trillion yuan from January to April, M2 increased by 8% YoY in April 》Breakdown of April's financial data: Government and corporate bonds boost social financing, with a trending shift in credit structure 》PBOC: Social financing increased by 15.18 trillion yuan in Q1, new RMB loans increased by 9.78 trillion yuan, M2 increased by 7% YoY in March 》PBOC: Social financing increased by 9.29 trillion yuan, new RMB loans increased by 6.14 trillion yuan in the first two months, M2 increased by 7% YoY in February 》PBOC: Social financing increased by 7.06 trillion yuan in January, with "full-throttle" credit extension, M2 increased by 7% YoY in January 》PBOC: Total social financing increased by 32.26 trillion yuan in 2024, M2 increased by 7.3% YoY in December 》PBOC makes a major announcement! Regarding macroeconomic policies and support for the capital market... 》PBOC: Social financing increased by 29.4 trillion yuan, new loans increased by 17.1 trillion yuan in the first 11 months, M2 increased by 7.1% YoY in November 》PBOC: Social financing increased by 27.06 trillion yuan in the first 10 months, M2 increased by 7.5% YoY in October 》Supportive tools for the capital market take effect, with M1 and M2 growth rates stabilizing and rebounding, and recent macroeconomic control strategies undergoing adaptive changes 》September's financial data released: Factors such as an increase in securities clients' margins drove a rebound in M2 growth, with overall stable social financing growth 》PBOC: Social financing increased by 21.9 trillion yuan in the first eight months, M2 increased by 6.3% YoY in August 》PBOC: Maintaining price stability and promoting a mild rebound in prices are important considerations for monetary policy 》PBOC: Social financing increased by 18.87 trillion yuan, RMB loans increased by 13.53 trillion yuan in the first seven months 》August's financial data released: Is there still "water squeezing" in financial data?Expert Interpretations Are Here! 》PBOC: In H1, the incremental social financing was RMB 18.1 trillion, with RMB 13.27 trillion increase in RMB loans; M2 grew 6.2% YoY in June 》June's financial data released: How to interpret the continued slowdown in the growth rate of some indicators? Authoritative experts discuss the "side effects" of the "scale complex" in total financial aggregates 》PBOC: In the first five months, the cumulative increase in social financing was RMB 14.8 trillion, with RMB 11.14 trillion increase in RMB loans; M2 grew 7% YoY in May 》Why are May's financial data worth noting, given the optimization of social financing structure and the possible underestimation of M1 growth rate? 》PBOC: In the first four months, the cumulative increase in social financing was RMB 12.73 trillion, with RMB 10.19 trillion increase in RMB loans; M2 grew 7.2% YoY in April 》In Q1, new social financing was RMB 12.93 trillion, with RMB 9.46 trillion increase in new RMB loans; M2 grew 8.3% YoY in March 》What impact did the steady growth of social financing, the moderate decline in financing costs, and the regulation of idle capital circulation and manual interest adjustments have on April's financial data? 》Latest financial data released: M2 and the stock of social financing grew 8.7% and 9.0% YoY, respectively, at the end of February. Let's see how authoritative experts interpret it! 》In the first two months, social financing and new RMB loans reached the second-highest levels for the same period in history, with M2 growing 8.7% YoY in February 》In January 2024, new social financing was RMB 6.5 trillion, with RMB 4.92 trillion increase in new loans; M2 grew 8.7% YoY 》PBOC: In December, the incremental social financing was RMB 1.94 trillion, with RMB 1.17 trillion increase in new RMB loans; M2 grew 9.7% YoY 》PBOC: In November, the incremental social financing was RMB 2.45 trillion, with RMB 1.09 trillion increase in new RMB loans; M2 grew 10% YoY 》November's financial data released: The scale of social financing continued to increase YoY, and the credit support for the real economy remained stable 》Will trillion-yuan government bonds "prop up" October's monetary and credit data? The market expects overall social financing to be strong but credit to be weak, with RRR cut expectations still brewing 》PBOC: In October, the incremental social financing was RMB 1.85 trillion, with RMB 738.4 billion increase in new RMB loans; M2 grew 10.3% YoY 》PBOC: In September, the incremental social financing was RMB 4.12 trillion, with RMB 2.31 trillion increase in new RMB loans; M2 grew 10.3% YoY 》PBOC makes a significant statement! Discussing the Sino-US interest rate spread, September's financial data, mortgage rates on existing home loans, and more... 》General Administration of Customs: China's imports and exports showed positive growth in the first three quarters, with September's monthly figure hitting a new high for the year 》PPI and CPI data have improved for three consecutive months. Experts: The improvement in prices is further confirmed, and it is expected that the YoY improvement trend in PPI will continue 》Interpretation by the National Bureau of Statistics (NBS): In September, CPI operated steadily, PPI's YoY decline narrowed for three consecutive months, and both increased MoM 》In September, the export value of mobile phones doubled MoM, and the YoY growth rate of automobile exports continued to lead 》PBOC: In August, the incremental social financing was RMB 3.12 trillion, with RMB 1.36 trillion increase in new RMB loans; M2 grew 10.6% YoY 》PBOC: Act decisively when the time is right to resolutely guard against the risk of excessive exchange rate fluctuations!The US dollar plunged against the offshore Chinese yuan 》PBOC: In August, the total social financing (TSF) was 528.2 billion yuan, and new yuan-denominated loans reached 345.9 billion yuan. M2 was up 10.7% YoY 》PBOC: In June, TSF and new yuan-denominated loans significantly exceeded expectations. M2 was up 11.3% YoY 》PBOC: In May, the increase in TSF was 1.56 trillion yuan, 331.2 billion yuan more than the previous month 》PBOC: In May, yuan-denominated loans increased by 1.36 trillion yuan, compared to the previous value of 718.8 billion yuan 》PBOC: In May, yuan-denominated deposits increased by 1.46 trillion yuan, a year-on-year decrease of 1.58 trillion yuan 》PBOC: In April, the increase in TSF was 1.22 trillion yuan, and new yuan-denominated loans reached 718.8 billion yuan. M2 was up 12.4% YoY 》PBOC: In Q1, yuan-denominated deposits increased by 15.39 trillion yuan, and loans increased by 10.6 trillion yuan 》[Major News] In February, the growth rate of M2 hit a seven-year high, while new yuan-denominated loans and TSF both reached record highs for the same period in history, exceeding expectations! 》In January, new yuan-denominated loans hit a record high! M2 was up 12.6% YoY, and new TSF reached 5.98 trillion yuan

Goldman Sachs analysts noted in a Monday report that the Chinese yuan has demonstrated resilience amid the China-US trade dispute, and its further appreciation is expected to benefit China's stock market. In its latest report, Goldman Sachs wrote that a 1% appreciation of the Chinese yuan against the US dollar could boost Chinese stocks by 3%, driven by factors such as improved corporate earnings prospects and increased foreign capital inflows. The report stated that the outlook for the yuan supports Goldman Sachs' overweight stance on Chinese stocks, and under a scenario of a stronger yuan, consumer discretionary, real estate, and brokerage stocks typically perform well. Goldman Sachs pointed out that the reasons for the yuan's stability during this tariff war include interventions by the People's Bank of China, the enhanced competitiveness and diversification of China's export sector, the undervaluation of the yuan, and the demand for asset diversification following the broad weakness of the US dollar. During the 2018 tariff war in Trump's first term, the yuan depreciated by up to 13% against the US dollar, a stark contrast to its current appreciation. As of press time, the US dollar-yuan exchange rate stood at 7.16804. Goldman Sachs forecasts that the US dollar-yuan exchange rate could reach 7 within the next 12 months. The institution also noted that yuan-denominated assets will continue to attract foreign capital, but the pace of net southbound purchases may slow down in the coming months. The wealthy are taking action As of last Friday, the Hang Seng Index had achieved seven consecutive weeks of gains. Although tariff uncertainties in early April triggered a significant market sell-off, investors' optimism towards Chinese stocks remained unchanged and was further strengthened after China and the US reached a mutual concession agreement. In April, Goldman Sachs twice lowered its forecast for the MSCI China Index, but raised it again in May after tariff risks were contained, increasing its earnings growth forecasts for the index in 2025 and 2026 from 6% and 7% to 9%, and raising the target price for the MSCI China Index over the next 12 months from 78 to 84. Note: Trend of iShares MSCI China ETF Meanwhile, a senior executive at Standard Chartered Bank stated that wealthy investors have not halted their investments due to tariff threats, believing that now is an excellent time to buy Hong Kong and mainland Chinese stocks. Raymond Ang, Global Head of Private Banking and Wealthy Clients for Greater China and North Asia at the bank, told the media that his private banking and wealthy clients are highly active in investing, and have redeemed their long-term fund positions linked to macroeconomic themes or specific sector funds, reallocating funds into Hong Kong and mainland Chinese stocks, as well as high-quality Chinese government bonds.

As Trump's erratic tariff policies triggered a wave of US asset sell-offs last month, a fresh wave of "de-dollarization" is gaining momentum across Asia... Multiple signs indicate that demand for currency derivatives that bypass the US dollar is rising among banks and brokers in the region, as trade tensions add further urgency to the "de-dollarization" shift that has been underway for years. Companies are receiving an increasing number of trading requests, including numerous hedging transactions that avoid the US dollar, involving currencies such as the Chinese yuan, Hong Kong dollar, UAE dirham, and euro. Meanwhile, a notable phenomenon is emerging: demand for yuan-denominated loans is beginning to grow robustly. This quest for alternatives once again demonstrates that companies and investors are moving away from the US dollar, the global reserve currency. Earlier this week, Caixin reported that Stephen Jen, a renowned strategist known for the "Dollar Smile Theory," had warned that a potential "avalanche" of $2.5 trillion in sell-offs from Asia could erode the long-term appeal of the US dollar. Acceleration of De-dollarization In the past, even when transferring funds between two local currencies, the vast majority of foreign exchange transactions would use the US dollar. For example, an Egyptian company in need of Philippine pesos would typically first convert its local currency into US dollars and then use the received US dollars to purchase pesos. However, according to recent conversations industry insiders have had with employees of companies and financial institutions across Asia, attempts to bypass the US dollar have been heating up , with companies increasingly inclined to adopt strategies that skip the US dollar intermediary. "The increase in transactions between non-US dollar currencies is largely due to technological advancements and improved liquidity. Both parties to the transactions believe that the prices may not be worse than those using the US dollar, so trading volumes naturally increase," said Gene Ma, head of China research at the Institute of International Finance (IIF). A source from a commodity trading company in Singapore said that financial institutions in Europe and other regions are increasingly marketing yuan derivatives linked to the US dollar. Multiple sources said that the growing trade ties between mainland China, Indonesia, and the Gulf region are also stimulating demand for non-US dollar hedging. According to an executive at a foreign bank in Indonesia, the bank will establish a dedicated team in Jakarta this year to meet the growing demand from local clients for transactions between the Indonesian rupiah and the Chinese yuan. Clearly, this gradual shift away from the US dollar is eroding the global financial system that has historically relied on the US dollar as the primary settlement currency.Over the past few decades, the US dollar has been ubiquitous, from debt financing in emerging markets to trade settlement. It is estimated that the use of the US dollar as an intermediary currency accounts for approximately 13% of its daily trading volume. However, the global status of the US dollar had already been under threat long before Trump's unpredictable trade policies forced the market to thoroughly reconsider the dollar's position. China has been committed to promoting the internationalization of the renminbi (RMB) for many years, signing currency settlement agreements with countries such as Brazil and Indonesia to facilitate the global use of the RMB. The BRICS group, composed of emerging market countries, has also discussed the issue of de-dollarization. The outbreak of the Russia-Ukraine conflict in 2022 further sparked interest in "de-dollarization" among some countries, as unprecedented Western sanctions against Russia quickly raised questions about whether the US dollar had been weaponized. RMB Gains Popularity According to SWIFT data, the RMB accounted for approximately 4.1% of global payment shares in March, still significantly lower than the US dollar's 49% share. However, some of China's payments are processed through its self-built system, which is growing rapidly. As a wholesale payment system dedicated to cross-border RMB payment and clearing, the Cross-border Interbank Payment System (CIPS) has seen steady growth in business volume and a significant expansion in coverage since its launch in October 2015. As of the end of December 2024, its business had covered 185 countries and regions worldwide. In 2024, the amount of cross-border RMB payments processed reached 175 trillion yuan, up 43% YoY. In March, the proportion of RMB used by Chinese investors and trading companies in cross-border transactions reached a record high. According to data released by the State Administration of Foreign Exchange, the proportion of RMB used by Chinese individuals and entities in cross-border transactions in March was 54.3%, with a total amount reaching 724.9 billion US dollars. Chinese exporters are also accelerating the conversion of US dollars into RMB, reversing the previous trend where some exporters preferred to hold US dollars due to concerns about the weakening of the RMB exchange rate. According to industry-compiled data, China's exports to Southeast Asia grew by more than 80% in the five years ending March 2025, while exports to the UAE and Saudi Arabia more than doubled. This far exceeded the growth rate of China's exports to the US and the EU. Although the hedging costs for the RMB are generally higher than those for the US dollar, the low interest rates on related RMB loans mean that the total cost remains attractive to borrowers. Alicia Garcia Herrero, Chief Asia-Pacific Economist at Natixis, said, "The cost of RMB financing is only one-third of that of US dollar financing."However, she also mentioned that the yuan currently has certain limitations due to weak overseas liquidity. In any case, the tariff-related fluctuations in the US dollar clearly indicate that it is not only China and other major economies that are eroding the global status of the US dollar. Trump's trade policies, disregard for traditional practices, and persistent criticism of the US Fed have all reinforced market perceptions that the US dollar's dominance in the global economy is facing its greatest threat in decades. "Given the US dollar's extraordinary staying power, its position would seem to require a truly epoch-making shift in the international environment to be displaced. However, the risks of such a seismic change are mounting," wrote analysts including Oliver Harvey of Deutsche Bank in a recent report.

[SMM Analysis: Aluminum Prices Decline Sharply in December, High Costs Make ADC12 Prices More Likely to Rise Than Fall] Overall, in December, secondary aluminum alloy prices, supported by aluminum scrap costs, showed a trend of being more likely to rise than fall, with the premium of ADC12 over A00 continuing to widen. Entering January, some regions actively promoted the "reverse invoicing" policy. However, due to undersupply, manufacturers found it difficult to pass on the increased costs to aluminum scrap traders. Therefore, driven by cost pressure, secondary aluminum alloy prices are expected to remain firm in the short term.

The European Commission has recently confirmed the approval for Baoshan Iron & Steel Co., Ltd. (Baosteel), Baowu Aluminum Technology Co., Ltd., and Kobe Steel, Ltd. of Japan to jointly establish an automotive aluminum sheet joint venture. This collaboration aims to address the growing demand for lightweight materials in the automotive industry, particularly in the manufacturing process of new energy vehicles, where aluminum alloys have attracted significant attention due to their lightweight and environmentally friendly characteristics. The tentative name of this joint venture is Baosteel Kobe Automotive Aluminum Sheet (Shanghai) Co., Ltd., with its registration location set in Shanghai and a capital fund reaching approximately 900 million Chinese yuan (around 18 billion Japanese yen). Kobe Steel Investment Co., Ltd. will hold a 50% stake, while Baosteel and Baowu Aluminum Technology will jointly hold the remaining 50%. The new company plans to mainly serve domestic automakers by producing and selling aluminum sheets, leveraging the strengths of all three parties in production, technology, and marketing to establish a high-quality production system for aluminum sheet materials used in automotive bodies.

The Federal Reserve remained interest rate unchanged at its May interest rate meeting, in line with market expectations, but the possibility of no rate cuts this year still exists; on May 3, the US non-farm data and unemployment rate for April cooled, and market expectations for one or two rate cuts this year have risen. The probability of a first rate cut in September increased, and the US dollar index fell below the 105 mark. During the suspension of SHFE trading, LME copper prices fell to around $9,750/mt.