Chinese domestic indebtedness continues to soar

BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/44

Using its broad concept of “total social financing,” China’s central bank reports that domestic indebtedness climbed 13 % y-o-y in the third quarter while the nominal value of GDP increased 6.2 %. Growth of the credit stock slowed slightly from 2014, when on-year growth was 15 %. In contrast, growth in the stock of bank deposits has accelerated this year, increasing 17 % y-o-y in the third quarter. Deposits in 2014 increased about 13 % y-o-y.

On-year growth in the stock of bank loans has been steady, remaining at 13 % for about a year. However, the stock of foreign currency-denominated bank loans has contracted during this year. In the third quarter, the stock of entrust and trust loans issued in the shadow banking sector grew by 14 % y-o-y. Growth in shadow bank lending has slowed significantly over the past two years. A year ago, lending of the shadow banking sector grew by nearly 30 % y-o-y.

Ratio of domestic credit stock to GDP
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Sources: Macrobond, BOFIT

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