Credit growth exceeds estimates

China’s broadest measure of new credit expanded faster than expected, bringing the total of new loans extended last year to roughly equal the size of Italy’s USD1.8 trillion economy.

The rapid pace of lending is at odds with recent pledges by policy makers to curb excessive borrowing and reduce risk in the financial system. The economy ended 2016 on a strong note as producer prices rebounded, factory activity stabilized and corporate profit recovered.

“The government said it would maintain a neutral monetary policy and curb financial risks, but there’s no sign of that in the credit data,” said Wang Tao, head of China economic research at UBS Group AG in Hong Kong.

Aggregate financing remained robust at 1.63 trillion yuan ($236 billion) in December, compared with a median estimate of 1.3 trillion yuan in a Bloomberg survey and 1.74 trillion yuan the prior month. New yuan loans stood at 1.04 trillion yuan, exceeding all 37 estimates in the survey.

“Beijing continues to say deleveraging, but time and time again its own numbers simply do not match what they’re trying to sell,” said Christopher Balding, an associate professor at the HSBC School of Business at Peking University in Shenzhen. “There’s a reason there are increasing levels of worry and risk within the Chinese economy.” MDT/Bloomberg