In the first half of the year, China’s social financing structure continued to improve, with increased investment and financing activity among tech companies. Data shows that corporate direct financing, such as bonds and stocks, accounted for a larger share of newly added social financing compared to the previous year.
From January to June, net financing through bonds and equity by non-financial Chinese enterprises made up 11.3% of total new social financing, marking a 5.6 percentage point rise from the same period last year, according to the People’s Bank of China. Specifically, bond financing saw a 77% annual increase, reaching CNY 2.1 trillion (approximately USD 310.3 billion), while equity financing grew by 72%, totaling CNY 293.3 billion.
Industry experts note that recent improvements in China’s bond market infrastructure, along with supportive policies like bond risk-sharing mechanisms, have created a more favorable environment for corporate bond issuance. Additionally, lower interest rates in the bond market over recent months have helped boost net corporate bond financing.
The surge in high-tech industries, especially areas like artificial intelligence and semiconductor development, has significantly fueled demand for financing among innovation-driven companies. The strong performance of tech stocks in mainland China’s equity markets during the first half enabled many high-tech firms to access capital more easily, leading to increased equity financing.
Despite these positive trends, overall social financing in China fell by 8.7% in the first half compared to the same period last year, totaling CNY 20.8 trillion (around USD 3.1 trillion), according to the People’s Bank of China. The decline was mainly driven by a drop in new bank loans and a reduction in net government bond financing.
Bank-issued new loans to the real economy decreased by 14.9%, down to CNY 10.8 trillion (about USD 1.6 trillion), while the net scale of government bonds issued fell by 15.7%, reaching CNY 6.4 trillion. Ongoing adjustments in China’s real estate sector, along with efforts by local governments to restructure debt, have led to less lending to property developers and reduced government-related financing, impacting the growth of new social financing.
Furthermore, emerging industries are much less reliant on bank credit compared to traditional, capital-intensive sectors. This shift indicates a decline in the overall debt-to-GDP ratio and suggests that the financial support for the real economy is increasingly becoming more efficient, favoring a healthier financing structure rather than simply expanding credit.