Credit and industrial profits – Will shadow banking help?

CHINA ADVISORY - Report 27 Sep 2019 by Andrew Collier

China is using many different methods for stimulating the economy, including tax cuts, monetary policy through lower interest rates (RRR and other methods), and targeted lending. However, one of the problems the country faces is the declining effectiveness of the credit it issues through various channels.

This is particularly important due to initial reports about an increase in shadow lending. Although the official data does not show this, a survey released by the Beige Book in the U.S. indicates a large jump in credit from the Chinese shadow banking non-banks. According to their report, shadow lenders accounted for 39% of total lending in the third quarter of the year, and 45% in the second quarter, the highest percentage of shadow financing since at least 2013. As recently as the middle of last year, shadow lending had shrunk to just 21% of total loans.

We don’t know if their methodology is reliable because getting accurate information from corporates through surveys is often a mug’s game. Corporate executives are not always reliable respondents to surveys about economic activity. Nonetheless, the survey may be an early indicator.

If there is a significant increase in shadow lending, will this have a big impact on economic growth?

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2025 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.