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Credit Growth in China: The Beginning of a “Beautiful” Deleveraging?
LAST month the People’s Bank of China (PBoC) released data on the stock of credit in the economy. As of the end of 2014, the stock of total social financing (TSF) was RMB123 trillion, 193% of GDP. This shows that credit growth is still outpacing output by 6 percentage points. The question on many analysts’ mind is whether China has reached a global maximum in credit to GDP, or if it will continue to rise over the next several years. It is helpful to consider the numerator and the denominator, though intrinsically related, separately. While forecasting the denominator – GDP growth – is outside the scope of ... (full story)