New statistics recently published by the Chinese authorities for the month of April have exposed significant strains in the country’s finances, according to analysts, while Beijing has spun a narrative of stability and resilience in the face of trade war shocks.
According to credit and social financing figures released by the People’s Bank of China (PBoC) on May 14, China’s broad (M2) money supply was 325.17 trillion yuan (about US$42.15 trillion) in April, a slight decrease from March but an 8-percent rise compared with April 2024. Meanwhile, narrow (M1) money supply rose 1.5 percent year-on-year, whilst falling by 4.35 trillion yuan to 109.14 trillion yuan in April compared with March.
Various types of loans tended to decrease, while deposits decreased. Household and non-financial corporate deposits fell by 1.39 trillion yuan and 1.33 trillion yuan, respectively, while government fiscal depsoits rose by 371 billion yuan in April compared with March.
One yuan is currently worth about US$0.14.
M1 supply refers to relatively liquid assets in an economy, such as cash and checking account deposits, while M2 is a measure of less readily available money, such as that in savings accounts and market funds.
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China’s M2 supply is very high and has continued to grow amidst a trend of deflation and stagnant economic activity reflected in various challenges such as low consumption, high unemployment, and a faltering real estate market as people and entities store their assets rather than spend or invest them.
On May 19, the Chinese National Bureau of Statistics (NBS) released April 2025 data showing a year-on-year increase of 5.1 percent for consumption, totaling about 3.72 trillion yuan for that month.
Meanwhile, national fixed asset investment, excluding rural households, from January to April 2025 increased by 4.0 percent year-on-year to about 14.7 trillion yuan, while real estate development investment for the same period fell by 10.3 percent year-on-year to 2.773 trillion yuan.
Sales area and revenues of new commercial housing also decreased by about 3 percent each for January–April 2025, compared with the same period in 2024.
According to SinoInsider, a risk consultancy that specializes in elite Chinese politics, economic developments, and international relations, the newest data from the PBoC and NBS indicates a continued trend of “deflation, weak credit demand, and an economy heavily reliant on government debt to mask underlying vulnerabilities.”
Writing in a May 22 newsletter entry, the analysts observed that M2 money supply growth (8 percent) was not matched by a simialr growth in M1 supply — just 1.5 percent, indicating poor liquidity. “Meanwhile, plummeting RMB loans and deposits reflect subdued credit demand and contracting financing activity, underscoring China’s anemic domestic demand.”
The fact that medium- and long-term loans only inched up by 12.4 billion yuan (about US$1.72 billion) throughout China, “signals that policies to boost mortgage and auto consumption have failed to gain traction.”
April’s corporate lending data — with a sharp decline in short-term loans and rapid increase in bill financing — “suggests firms are prioritizing short-term liquidity over productive investments in expansion or innovation, with capital circulating within the banking system rather than driving industrial growth,” per SinoInsider.
As for the 5.1 percent increase in retail sales of consumer goods compared with last April, SinoInsider notes that Beijing’s claim rings hollow, given that public statistics from China’s wealthy first-tier cities have seen consumption growth “consistently trail” the supposed national average, despite residents of those areas possessing considerably greater spending power.
“Rising domestic skepticism, the U.S.’s imposition of steep tariffs on Chinese exports in early April 2025 disrupted the export sector, likely dampening economic sentiment and consumer spending,” the newsletter reads.
