There is little sign of a slowdown in credit growth in China as the authorities continue to try and drive cash into the disrupted economy. Total social financing came in at a robust CNY3.09trn while overall new loan growth hit CNY1.701trn. This marks a significant pick up in credit creation, with household debt up nearly 2% pts of GDP since the end of last year while NFC bank debt has jumped from 95% to 102% of GDP.
Chinese August money supply and credit data was in line with market expectations. Money supply growth remains stable. Even if M2 was fractionally above estimates the broad money growth rate has been basically static for the past eighteen months. On the credit side loan growth picked up a little from last month, but overall not that different to what we saw this time last year.
Money supply growth remains steady. Credit growth has quickened a touch from April but overall there isn’t much evidence that the governments stimulus efforts have opened the credit spigots, particularly the private sector. Debt is growing a little faster than GDP again, but not markedly.
Underlying money supply growth remains weak, reflected in M2’s shrinking share relative to GDP. But the credit multipliers do look better, with some upward momentum suggesting that efforts to spur lending have been working, and the right type of lending as seen by the ongoing contraction of borrowing from the shadow banking sectors.