Recently, the People's Bank of China (hereinafter referred to as the "Central Bank") released the Report on the Implementation of China's Monetary Policy in the Second Quarter of 2025 (hereinafter referred to as the "Report"). The report shows that since the beginning of this year, the central bank has conscientiously implemented the decisions and arrangements of the Party Central Committee and the State Council, moderately relaxed monetary policy, strengthened countercyclical adjustment, comprehensively used various monetary policy tools, served the high-quality development of the real economy, and created a suitable monetary and financial environment for the sustained recovery and improvement of the economy. While summarizing the implementation of monetary policy in the first half of the year, the report also elaborates on the main ideas for the next stage of monetary policy. Among them, it is clear to implement a refined and moderately loose monetary policy. Based on the domestic and international economic and financial situation and the operation of financial markets, we should grasp the intensity and pace of policy implementation, maintain sufficient liquidity, match the growth of social financing scale and money supply with the expected goals of economic growth and overall price level, and continuously create a suitable financial environment. Industry experts suggest that the key to implementing a moderately loose monetary policy in the next step is to focus on its implementation. The transmission and actual effects of previous policies should be closely monitored to maintain continuity, enhance flexibility, and fully unleash policy effects. At the same time, to consolidate and expand the positive momentum of economic recovery, it is necessary to strengthen the consistency of macroeconomic policy orientation and further leverage policy synergy. The focus of monetary policy is on implementing a moderately loose monetary policy. Compared to the statement "implementing a moderately loose monetary policy well" in the "Report on the Implementation of China's Monetary Policy in the First Quarter of 2025", this report has been adjusted to "implementing a refined and moderately loose monetary policy". Wen Bin, Chief Economist of Minsheng Bank, told reporters that "implementing a refined and moderately loose monetary policy" means that the focus of the subsequent monetary policy is to focus on implementation, actively promote the implementation of the package of financial policies launched in May and the recent stable growth increment policies, and closely track the transmission and actual effects of previous policies to enhance flexibility. The probability of further easing in the short term is not high. Tan Yiming, Chief Fixed Income Analyst at Tianfeng Securities Research Institute, believes that the addition of the phrase "implementation details" in the moderately loose monetary policy may convey the judgment that the "moderately loose" operation was good in the first half of the year. In the second half of the year, more attention may be paid to the effectiveness of policy implementation, grasping the strength and pace, leaving room for flexible response according to the situation. Overall, in the second half of the year, in order to stabilize credit, promote domestic demand, strengthen coordination, and maintain policy continuity and stability, monetary policy will still maintain a supportive stance. However, from the perspective of policy substitution effects, the timing of further reserve requirement ratio cuts may be postponed. ”Wen Bin analyzed that, on the one hand, the recent implementation of two fiscal interest subsidy policies is equivalent to targeted interest rate cuts, reducing the necessity of aggregate tools; On the other hand, structural policies are more precise in exerting force, avoiding idle funds, and compressing the space for comprehensive interest rate cuts. In addition, with the accelerated activation of deposits and a moderate rebound in prices, there are more positive factors, and the central bank may be more cautious in its interest rate cut decisions. In terms of guiding banks to stabilize credit support, there has also been a shift in the credit tone of this report. The relevant statement in the "Report on the Implementation of China's Monetary Policy in the First Quarter of 2025" is "to guide banks to increase credit injection and maintain reasonable growth in total credit volume", but this report has been adjusted to "guide banks to stabilize credit support and maintain reasonable growth in total financial volume". Wen Bin believes that this means that the demand for credit quantity will relatively decrease in the second half of the year, and more emphasis will be placed on "stabilizing quantity and improving quality". More attention will be paid to indicators such as social financing scale and M2 (broad money) to adapt to the current market supply and demand and financing structure changes, and to reduce internal competition. In the long run, breaking the internal competition of financial institutions will squeeze out inflated idle loans, gradually shifting from "comparing scale and growth rate" to "comparing service and precision", promoting higher quality and more sustainable financial support for the real economy. The aforementioned industry experts also stated that when observing the total amount of finance, we should not only look at loans, but also observe more comprehensive indicators such as social financing scale and M2. In recent years, with the innovation of financial markets and the development of direct financing, the financing channels for enterprises have become increasingly diversified. In addition, the expansion and speed of government bond issuance have made it increasingly difficult for loans, as one of the financing channels for enterprises, to fully reflect the effectiveness of financial support for the real economy. "The expert stated that the central bank introduced a social financing scale index around 2010, which includes a wide range of financing channels such as loans, government bonds, corporate bonds, stocks, non-standard, etc., which can more comprehensively depict the overall growth of financial aggregate and is relatively more analytical. At present, China's macroeconomic regulation focuses on matching the expected targets of social financing scale, M2 growth rate, economic growth, and overall price level. There are no specific requirements for loans, and social financing scale is prioritized based on this background. In this report, four columns are set up to promote the improvement of high-quality service consumption supply, focusing on inclusive small and micro financial services, financial support for technological innovation, credit structure optimization, and financial support to promote the improvement of high-quality service consumption supply. Efforts are made to guide the continuous optimization of credit structure towards the direction of economic structure transformation and enhance the quality and efficiency of financial services for the real economy. The report mentioned that in recent years, the central bank has continuously guided financial institutions to enhance the adaptability of financial services to economic structural adjustment, especially focusing on the requirements of doing a good job in the "five major articles" of finance and supporting the expansion of domestic demand. More credit resources have been directed towards major strategies, key areas, and weak links of the national economy, promoting a virtuous cycle between finance and the real economy. From multiple dimensions, the credit structure is constantly being optimized. The report shows that the structure of new loans has shifted from real estate and infrastructure loans accounting for over 60% in 2016 to the current "five major articles" in finance, where loans account for about 70%. From the perspective of new loan allocation, loans in the areas of new momentum and domestic demand have maintained a relatively fast growth rate. From the perspective of loan term structure, the increase in the proportion of medium and long-term loans is conducive to providing stable financial support for the high-quality development of the real economy. From the perspective of loan subject structure, the proportion of corporate loans is constantly increasing. While optimizing the credit structure, China's overall financing structure is also constantly improving, with the proportion of direct financing continuing to rise. At the same time, the report also made key arrangements for financial services to the real economy. In the development of inclusive finance, we will continuously improve the accessibility and sustainability of inclusive small and micro finance in the future, and achieve high-quality development of inclusive finance. In terms of supporting technological innovation, the next step will be to increase credit support for technology-based small and medium-sized enterprises, leverage the joint efforts of the central and local governments, jointly promote the development of the technology innovation bond market, cultivate and improve the financial market ecology that supports technological innovation, and provide more powerful financial support for high-level technological self-reliance and self-improvement. In terms of promoting consumption, financial policies will focus on the supply side and work together with other policies to promote the improvement of high-quality service consumption supply, create effective demand with high-quality supply, and help unleash the potential for consumption growth. (New Society)