Government bonds in July support social financing, but demand still needs to be boosted.

Yesterday, the central bank released the financial statistics for July. Among them, the net financing of government bonds in the first seven months of the year was 8.9 trillion yuan, an increase of 4.88 trillion yuan compared to the same period last year. "The growth trend of social financing in July continues to increase compared to the same period last year, mainly supported by government bond financing. The amount of new special bond issuances in July increased significantly compared to the previous year, driving a 555.9 billion yuan increase in government bond financing for the month," said Wang Qing, chief macro analyst at Orient Securities. Chief economist at Zhongxin Securities, Ming Ming, also said that government bond issuances in the second half of the year will continue to provide strong support for social financing. However, considering the remaining quota, the level of support may gradually decrease, and whether credit can take over will have an important impact on the performance of social financing. In addition, industry experts believe that the impact of local government bond replacement on loan data remains significant this year. Studies estimate that so far, special bonds for debt-to-equity swaps have replaced loans totaling 2.6 trillion yuan, impacting loan growth by about 1 percentage point after the removal of the debt-to-equity impact. As a result, the year-on-year loan growth in July is close to 8%, which is still a relatively high level. In the long run, the replacement of local debt is helpful for clearing risks and financial stability, freeing up more financial resources for the benefit of the people, promoting development, and also helping to release more credit resources to flow into the real economy.