In July, the scissors difference between M2 and M1 narrowed significantly, indicating an improvement in fund circulation efficiency. This trend is in line with the improvement in economic recovery and economic activity.

On August 13th, the central bank disclosed the latest data showing that at the end of July, broad money supply was 329.94 trillion yuan, an 8.8% increase year-on-year. Narrow money supply was 111.06 trillion yuan, a 5.6% increase year-on-year. The difference in growth rates between M2 and M1 was 3.2%, significantly narrower compared to the peak in September of last year. Compared to M2, which includes time deposits, M1 mainly consists of cash, business and personal demand deposits, as well as easily accessible funds such as Alipay and WeChat Pay. Since January of this year, the central bank has been using a revised definition of narrow money supply. With the comparable definition, at the end of September 2024, the growth rate of M1 was -3.3%, and the difference in growth rates between M2 and M1 was 10.1%. Industry experts say that this year, the difference between M2 and M1 has significantly narrowed, reflecting an increase in the activation of funds and efficiency in circulation. Various policies to stabilize the market and expectations have effectively boosted market confidence, which is consistent with the trend of economic recovery.