China Economic Net, Beijing, Feb. 20 (Report) — Today, the head of the Survey and Statistics Department of the People's Bank of China answered reporters' questions on matters related to regional social financing scale statistics. The official stated that statistics show that in recent years China's regional social financing scale has grown rapidly, strongly supporting the relatively rapid development of regional economies. In 2013, the social financing scales of the eastern, central and western regions were 9.04 trillion yuan, 3.40 trillion yuan and 3.79 trillion yuan respectively, 1.39 trillion yuan, 1.10 trillion yuan and 1.29 trillion yuan more than in 2011 respectively.

 

    In addition, from a structural perspective, there are mainly the following three characteristics.

 

　　First, financing concentration has continued to decline. In 2013, the top six regions with the largest regional social financing scale were concentrated in six eastern provinces and municipalities, namely Guangdong, Beijing, Jiangsu, Shandong, Zhejiang and Shanghai, with their combined financing amount accounting for 37.9% of the national total. The financing concentration fell by 1.5 percentage points from 2012 and by 6.2 percentage points from 2011.

 

　　Second, the regional imbalance in financing has improved markedly. In 2013, the social financing scales of the eastern, central and western regions accounted for 52.2%, 19.6% and 21.9% of the total regional social financing scale during the same period respectively; the share of the eastern region fell by 6.4 percentage points from 2011, while the shares of the central and western regions rose by 2.0 and 2.7 percentage points respectively from 2011.

 

　　Third, there are certain differences in regional financing structures. The dependence of financing on bank loans in the central and western regions is noticeably higher than in the eastern region, while the proportion of direct financing in the eastern region is relatively high. In 2013, new RMB loans in the central and western regions accounted for 51.8% and 54.6% of their social financing scales respectively, 2.4 and 5.2 percentage points higher than in the eastern region; direct financing in the eastern region (in this report, direct financing refers to the sum of non-financial enterprise bond financing and domestic equity financing) accounted for 13.5% of its social financing scale, 1.5 and 3.0 percentage points higher than in the central and western regions respectively.

 

    The details are as follows:

 

    Q: What is the background behind the emergence of the concept of social financing scale?

 

　　A: The social financing scale is a new monitoring and analysis indicator introduced in China's financial macro-control starting in 2011. For a long period in the past, the relationship between finance and the economy generally referred to the banking system promoting economic development and maintaining basic price stability through its asset and liability activities. In recent years, China's total financial volume has expanded rapidly, the financial structure has developed in a diversified manner, financial products and financing instruments have been continuously innovated, securities and insurance institutions have increased their funding support for the real economy, and commercial banks' off-balance-sheet business has shown an obvious substitution effect on loans. New RMB loans can no longer fully reflect the relationship between finance and the economy, nor can they fully reflect the financing scale of the real economy.

 

　　This is mainly reflected in the following: First, the providers of funds have expanded from traditional banking institutions to securities, insurance and other non-deposit-taking financial companies. Second, financing instruments have developed in a diversified manner, the pace of innovation in non-credit financial instruments has accelerated noticeably, and the proportion of loans in the social financing scale has continued to decline. Third, if financial regulation focuses only on loans, it will create a phenomenon of "pressing down the gourd only to see the ladle float up." The main reason is that with the rapid development of financial markets, the financial variables that have a major impact on the operation of the real economy include not only money and credit in the traditional sense, but also trust, wealth management products, bonds, stocks and other financial assets. Only by including commercial banks' off-balance-sheet business, funds provided by non-bank financial institutions and direct financing in the statistical scope can the overall situation of social financing be comprehensively monitored and analyzed. Therefore, both theoretical research and policy operations require statistical indicators that can comprehensively and accurately reflect the relationship between finance and the economy.

 

　　In 2002, financing other than RMB loans accounted for a very small proportion. That year, RMB loans accounted for 91.9% of the social financing scale, while other financing accounted for only 8.1%, so statistics on the social financing scale were of little significance. But by 2010 the situation was completely different: the proportion of RMB loans in the social financing scale fell below 60%, and in 2013 it further dropped to 51.4%. Moreover, with the rapid development of financial innovation, the proportion of RMB loans may be even lower in the future. To improve the effectiveness of financial regulation, attention must be paid to both RMB loans and other forms of financing.

 

　　In November 2010, under the leadership of Governor Zhou Xiaochuan, the Survey and Statistics Department of the People's Bank of China began to study and compile the social financing scale indicator. In December 2010, the Central Economic Work Conference pointed out that it was necessary to "maintain a reasonable scale of social financing." To date, this indicator has been written into the documents of the Central Economic Work Conference for four consecutive years, into the Government Work Report for three consecutive years, and once into the document of the National Financial Work Conference. It has received welcome and widespread attention from leaders at all levels and all sectors of society, and together with money and credit has become an important monitoring and analysis indicator for China's financial macro-control. In accordance with the requirements of the State Council, the People's Bank of China is responsible for the statistical release of the social financing scale. Since 2011, the People's Bank of China has released national social financing scale data quarterly, began releasing it monthly in 2012, and in September 2012 published monthly historical data since 2002.

 

　　To meet the needs of various regions and departments, in 2012 the People's Bank of China established a quarterly statistical system for regional social financing scale. With the strong support of various data reporting units, after two years of gradual improvement, data quality has continued to improve.

 

　　Q: What is the regional social financing scale? What are its definition and connotation?

 

　　A: The regional social financing scale refers to the total amount of funds obtained by the real economy (i.e., enterprises and individuals) from the financial system within a certain period (monthly, quarterly or annually) and within a certain region. It is a total-volume indicator that comprehensively reflects the financial system's funding support for a certain region during a certain period. The regional social financing scale is an incremental concept, that is, the difference between the ending and beginning balances, or the difference between the amount issued or incurred in the current period and the amount redeemed or repaid in the current period.

 

　　The statistical scope and connotation of the regional social financing scale are consistent with those of the national social financing scale, that is, the financial system is treated as a whole financial concept. From the institutional perspective, it includes banks, securities, insurance and other financial institutions; from the market perspective, it includes the credit market, bond market, stock market, insurance market and intermediary business market, etc.

 

　　The regional social financing scale mainly consists of four parts. First, funding support provided by local financial institutions to the real economy through on-balance-sheet business, including RMB loans and foreign currency loans; second, funding support provided by local financial institutions to the real economy through off-balance-sheet business, including entrusted loans, trust loans and undiscounted bankers' acceptances; third, direct financing obtained by the local real economy using standardized financial instruments in formal financial markets, mainly including domestic equity financing by non-financial enterprises and corporate bond financing; fourth, funding support provided to the real economy through other means, mainly including insurance company compensation, investment real estate, loans from microcredit companies and loans from lending companies.

 

　　Q: What is the discrepancy between the aggregated regional social financing scale data and the national data? Does it meet the conditions for data release?

 

　　A: Since the establishment of the regional social financing scale statistical system in 2012, we have been actively improving the statistical system and strengthening communication and coordination with relevant data reporting departments. With the strong support of the China Securities Regulatory Commission, the China Insurance Regulatory Commission, China Government Securities Depository Trust & Clearing Co., Ltd., the National Association of Financial Market Institutional Investors and other departments, the quality and timeliness of regional social financing scale statistics have improved markedly. At present, the error rate between the aggregated regional social financing scale and the national data has remained stable at around 0.2%, down 1.6 percentage points from 2011 and noticeably lower than the error level between aggregated regional GDP data and national GDP. It has basically met the conditions for statistical data release.

 

　　In the future, we will continue to emancipate our minds, pioneer and innovate, seek truth and be pragmatic, further improve the regional social financing scale statistical system, and enhance data quality and timeliness, so as to accurately reflect the relationship between finance and regional economies and the support of finance for regional economic development.

 

　　Q: What are the basic characteristics of China's regional social financing scale?

 

　　A: Statistics show that in recent years China's regional social financing scale has grown rapidly, strongly supporting the relatively rapid development of regional economies. In 2013, the social financing scales of the eastern, central and western regions were 9.04 trillion yuan, 3.40 trillion yuan and 3.79 trillion yuan respectively, 1.39 trillion yuan, 1.10 trillion yuan and 1.29 trillion yuan more than in 2011 respectively.

 

　　From a structural perspective, there are mainly the following three characteristics.

 

　　First, financing concentration has continued to decline. In 2013, the top six regions with the largest regional social financing scale were concentrated in six eastern provinces and municipalities, namely Guangdong, Beijing, Jiangsu, Shandong, Zhejiang and Shanghai, with their combined financing amount accounting for 37.9% of the national total. The financing concentration fell by 1.5 percentage points from 2012 and by 6.2 percentage points from 2011.

 

　　Second, the regional imbalance in financing has improved markedly. In 2013, the social financing scales of the eastern, central and western regions accounted for 52.2%, 19.6% and 21.9% of the total regional social financing scale during the same period respectively; the share of the eastern region fell by 6.4 percentage points from 2011, while the shares of the central and western regions rose by 2.0 and 2.7 percentage points respectively from 2011.

 

　　Third, there are certain differences in regional financing structures. The dependence of financing on bank loans in the central and western regions is noticeably higher than in the eastern region, while the proportion of direct financing in the eastern region is relatively high. In 2013, new RMB loans in the central and western regions accounted for 51.8% and 54.6% of their social financing scales respectively, 2.4 and 5.2 percentage points higher than in the eastern region; direct financing in the eastern region (in this report, direct financing refers to the sum of non-financial enterprise bond financing and domestic equity financing) accounted for 13.5% of its social financing scale, 1.5 and 3.0 percentage points higher than in the central and western regions respectively.

 

　　Q: What is the significance of establishing regional social financing scale statistics?

 

　　A: Compared with RMB loans, the regional social financing scale more comprehensively reflects the funding support obtained by the local real economy from the entire financial system. Establishing regional social financing scale statistics is conducive to increasing financial support for the real economy, promoting the optimization, transformation and upgrading of regional economic structures, narrowing differences in regional economic development, and also improving the regional financing environment and enhancing the positive interaction between finance and the economy. Specifically, it is significant in five aspects.

 

　　First, it is conducive to increasing financial support for regional economies. In traditional analysis of the economic-financial relationship, new loans are usually used to reflect the strength of financial support for regional economies. But in recent years, China's financial markets have developed rapidly, and the financial structure has shown an obvious trend of diversification. Especially in some developed coastal areas, the proportion of new RMB loans in the regional social financing scale has fallen below 50%, and this indicator can no longer fully reflect financial support for regional economic development. Establishing regional social financing scale statistics is conducive to comprehensively reflecting the relationship between finance and regional economic development and increasing financial support for the economy.

 

　　Second, it is conducive to promoting economic restructuring, transformation and upgrading. At present, China's economic development remains unbalanced, and differences between urban and rural areas, between regions, between industries and between departments are still relatively large. Establishing regional social financing scale statistics is conducive to using different financing instruments, optimizing the industrial structure, promoting economic restructuring, transformation and upgrading, and enhancing the sustainability of economic development.

 

　　Third, it is conducive to meeting the diversified investment and financing needs of different regions. The regional social financing scale indicator can more comprehensively reflect the characteristics of regional financial development. For example, in some regions the proportion of direct financing is relatively low, and the corporate financing structure needs to be improved. Establishing regional social financing scale statistics is conducive to studying the impact of financing structures on differences in regional economic development, optimizing financing structures, cultivating and developing regional financial markets, and meeting the diversified investment and financing needs of different regions.

 

　　Fourth, it is conducive to seeking strategies from a financial perspective to narrow imbalances in regional economic development. The levels and stages of economic development among China's regions differ greatly. Establishing regional social financing scale statistics is conducive to targeting the financing characteristics and economic development conditions of different regions and seeking strategies from a financial perspective to narrow imbalances in regional economic development.

 

　　Fifth, it is conducive to strengthening the monitoring of regional financial risks. The regional social financing scale includes data on various financing instruments. Through monitoring and analysis of these data, problems and risk points in regional financial development can be identified. For example, in some regions the proportion of loans from non-bank financial institutions is relatively high and growing rapidly, and the financial risks contained therein may need to be monitored; in some regions financing related to local governments is growing rapidly, and the local government debt risk in those regions may need attention, etc.