The People's Bank of China (PBOC) Adjusts Narrow Money (M1) Statistical Scope: A Review of Recent Economic and Financial Developments in China

The People's Bank of China (PBOC) Adjusts Narrow Money (M1) Statistical Scope: A Review of Recent Economic and Financial Developments in ChinaStarting January 2025, the PBOC will implement a revised statistical scope for narrow money (M1). The revised M1 will include currency in circulation (M0), unit current deposits, personal current deposits, and customer reserve funds of non-bank payment institutions

The People's Bank of China (PBOC) Adjusts Narrow Money (M1) Statistical Scope: A Review of Recent Economic and Financial Developments in China

Starting January 2025, the PBOC will implement a revised statistical scope for narrow money (M1). The revised M1 will include currency in circulation (M0), unit current deposits, personal current deposits, and customer reserve funds of non-bank payment institutions. PBOC Governor Yi Gang stated that in 2025, the central bank will continue to maintain a supportive monetary policy stance and orientation, comprehensively utilizing various monetary policy tools, increasing counter-cyclical regulation, maintaining reasonably ample liquidity, and lowering the comprehensive financing costs for enterprises and residents.

This adjustment in monetary policy and the guidance on future direction provide crucial clues to understanding the trajectory of China's macroeconomic policy. Against the backdrop of increasing global economic downward pressure, China remains committed to maintaining stable economic growth and supporting the development of the real economy. Maintaining reasonably ample liquidity and lowering financing costs will help alleviate the financial pressure on enterprises and residents, stimulating economic vitality. The implementation of the new M1 statistical scope signifies an improvement in the central bank's ability to monitor and regulate the money supply, enabling a more accurate grasp of the pulse of the money market and better implementation of monetary policy.

Beyond monetary policy adjustments, several noteworthy events have taken place recently in China's economic and financial sectors:

Corporate Developments:

• TCL Zhong Huan and Maxeon Complete CFIUS Review: TCL Zhong Huan announced that it and Maxeon jointly submitted a voluntary application to the Committee on Foreign Investment in the United States (CFIUS) regarding Maxeon's restructuring and have completed the review, concluding that no national security issues exist. This indicates that the cross-border investment has received US government approval, which is positive for TCL Zhong Huan's international development. The smooth passage of this review also reflects the willingness of China and the US to cooperate in certain areas.

• Shareholder of Fujie Environmental Involved in Short-Term Trading Investigation: Fujie Environmental announced that Shenzhen Zhongtian Chuanyi Fund Management Co., Ltd., a shareholder holding more than 5% of the company's shares, is under investigation by the China Securities Regulatory Commission (CSRC) for suspected short-term trading of Fujie Environmentals stock. This incident highlights the regulatory authorities' strict crackdown on illegal activities in the capital market and their determination to maintain fair and just markets. This will have a certain impact on the company's stock price and investor confidence, reminding investors to be aware of investment risks and invest rationally.

• XPeng Motors Condemns the Release of False Information by Former Employee: XPeng Motors' legal department issued a statement, noting that recently, a former employee has been using their XPeng identity to participate in paid interviews with some securities firms and spreading false information. The company will take legal action to protect its own rights and interests. This incident reflects the challenges companies face in maintaining their image and business reputation, and warns companies to strengthen internal information management and employee conduct regulations.

• Douyin Upgrades High-Quality Short-Drama Support Plan: Douyin upgraded its high-quality short-drama support plan, increasing the investment proportion and traffic promotion exposure for high-quality works. This aims to encourage the creation of high-quality short-drama content and promote the healthy development of the short-video industry. This is good news for short-drama creators, encouraging the production of more high-quality content.

• Sanofi Invests in Insulin Production Base in Beijing Yizhuang: The Beijing Economic-Technological Development Area Management Committee and Sanofi signed a memorandum of cooperation, with Sanofi investing approximately 1 billion in a new insulin production base in Beijing Yizhuang. This is the first time a multinational pharmaceutical company has established a biopharmaceutical raw material production base in China, which is of significant importance for improving the development level of China's biopharmaceutical industry and shows the confidence of multinational companies in the Chinese market.

• Clarification on Rumors of Nezha Auto CEO Zhang Yong's Departure: Regarding rumors that Nezha Auto CEO Zhang Yong had left the company, relevant company officials clearly stated that Zhang Yong is still in office and the company's operations are normal. This incident shows that companies need to respond to market rumors in a timely manner to maintain their image and stable development.

• WeDoctor Resumes Hong Kong IPO Plan: Tencent-backed WeDoctor has resumed its Hong Kong IPO plan, expected to raise US$400 million to US$500 million. This will provide financial support for WeDoctor's further development and expansion, and also reflects the capital market's attention to the healthcare industry.

Capital Market Developments:

• A-share Market Upward Trend: On December 2nd, the three major indexes of the A-share market all rose by more than 1%, with Hainan, humanoid robots, automobile manufacturers, and film and television sectors leading the gains. The overall market showed a positive trend, and investor confidence improved.

• Hong Kong Stock Market Rise: On December 2nd, the Hong Kong Hang Seng Index closed up 0.65%, and the Hang Seng Tech Index rose 1.2%. Southbound funds had a net inflow of HK$19.654 billion, indicating international capital's optimism towards the Hong Kong market.

• Shenzhen Stock Exchange Sample Stock Regular Adjustment: The Shenzhen Stock Exchange will implement a regular adjustment of sample stocks for indexes such as the Shenzhen Component Index, the ChiNext Index, and the Shenzhen 100 on December 16th. This aims to optimize the representativeness and accuracy of the indexes and improve market efficiency.

• China Securities Dealers Association Punishes Several Rural Commercial Banks: The China Securities Dealers Association found that several rural commercial banks, including Changshu Rural Commercial Bank, had weak internal control management of bond transactions and excessive incentives for traders, leading to distorted trading behavior by some traders. They will be subject to self-discipline penalties and transferred to relevant departments. This reflects the determination of regulatory authorities to strengthen the supervision of the bond market and prevent risks.

Industry Developments:

• Textile Industry Data: From January to October, the industrial added value and operating revenue of large-scale textile enterprises increased by 4.4% year-on-year, and total profits increased by 9.7% year-on-year. This indicates that the overall operation of the textile industry is stable and the development trend is good.

• National-Level Intellectual Property Protection Center Construction: The Ningxia Hui Autonomous Region was approved to build a national-level intellectual property protection center, bringing the total number of such centers nationwide to 75. This will help strengthen intellectual property protection and promote innovation-driven development.

• Enterprise Annuity Investment Situation: In the third quarter of 2024, the net asset value of enterprise annuity investments was approximately RMB 3.49 trillion, with investment income of RMB 533.24 billion and a weighted average rate of return of 1.56%. This reflects the good performance of enterprise annuity investments.

• Rumors about WeChat Zero Balance Transfer Fees: Regarding online rumors that "transferring from a salary card to WeChat Zero Balance does not incur fees," a Shanghai Securities News reporter confirmed that the news is true, but this rule has been in place for a long time. This helps to improve the convenience and user experience of WeChat Pay.

• Jiaxing Haishen County Introduces Optimized Real Estate Market Policies: Jiaxing Haishen County introduced a home purchase subsidy policy aimed at promoting the healthy development of the real estate market. This is good news for the local real estate market.

• Foshan City Adjusts Housing Provident Fund Loan Policies: Foshan City adjusted its housing provident fund loan policies, increasing the loan amount for families with two or more children. This will help alleviate the housing pressure for families with two or more children.

Other News:

• Approval of Traffic Bank Vice President's Appointment: Gu Bin's appointment as vice president of Traffic Bank was approved and took effect by the National Financial Regulatory Administration.

• Resignation of Zhongcheng Shares Chairman: Zhang Peng, chairman of Zhongcheng Shares, resigned from his position due to a job transfer.

• Hu Xin, Former Vice President of Shanghai City Investment Group, Involved in Bribery Case: The First Branch of the Shanghai Municipal People's Procuratorate lawfully arrested Hu Xin.

• Japanese Cryptocurrency Exchange DMMBitcoin Announces Closure: DMMBitcoin will cease operations and transfer its customer assets to SBIVCTrade.

• OpenAI Considers Advertising Model: OpenAI's CFO said the company is considering an advertising model.

• McDelivery Adjusts Fees: McDelivery will implement a new fee model on December 9th.

• FedEx Asia Pacific Region Shopping Season Survey: 70% of SMEs expect year-on-year sales growth this shopping season.

• Tesla FSD v13 Update: Tesla is rolling out the FSD v13 update to some users.

• Decline in Number of Japanese Dairy Farmers: Affected by rising costs, the number of dairy farmers in Japan has fallen below 10,000 for the first time.

• Alibaba Invests in South Korean E-commerce Platform ABLY: Alibaba invested in South Korean e-commerce platform ABLY Group, acquiring a 5% stake.

• LVMH CEO Arnault Testifies in Court: LVMH