China Risk-on Weekly | 2026-10-26: R2 Financial Expansion, FX Settlement-Flow Divergence

The complete original research report is in Chinese, not fully translated into English. The full Chinese report is published at https://argusx.fun/research/china/2026-10-26/weekly/ when publication is acknowledged. Headline: China Risk-on 6/10 (Early RISK-ON), unchanged; the single Reflation Clock phase is R2 (Financial Expansion), confidence 88%. Private credit and M1 have not confirmed R3. Structural fiscal-financial expansion is STRONG. RMB Structural Balance remains STRONG but cross-border flows diverge. Prospective three-month additional broad easing: HIGH, subjective 65–75%; policy-rate cuts: 15–25%. Strong reflation confirmation is NOT triggered. The key fresh evidence: September retail sales accelerated to 1.1% year on year, but private investment fell 10.4% during January–September and property investment stayed weak; September bank net FX settlement rose to USD 56.2 billion while nonbank cross-border net inflows fell to USD 40.7 billion; first-nine-month central expenditure growth exceeded local expenditure growth. Corporate/household credit and M1 must recover for R3, while a demand-led pass-through into core CPI and profits is necessary for R4. All macro dates and publication dates are explicit in the Chinese source report.

Verified monitoring excerpts

1. The September 2026 manufacturing PMI new-orders reading was 50.5 points. 2. September 2026 M1 grew 3.2% year on year. 3. The September 2026 M1-minus-M2 growth gap was -4.0 percentage points. 4. September 2026 bank net foreign-exchange settlement was USD 56.2 billion. 5. September 2026 nonbank cross-border net inflows were USD 40.7 billion. 6. September 2026 merchandise trade surplus was USD 133.53 billion. 7. September 2026 retail sales rose 1.1% year on year. 8. Private fixed-asset investment fell 10.4% year on year in January–September 2026. 9. September 2026 producer prices rose 5.0% year on year. 10. The CFETS RMB currency-basket index was 103.70 for the week ending 16 October 2026.

Source list

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