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CHINA 2013 MACRO OVERVIEW Others are more relaxed about the expansion of shadow banking products in China, and take comfort from recent government measures aimed at decelerating the headlong growth in credit. As UBS advised in a recent update, “the combination of a slower credit growth and a pick-up in real activity is a healthier development than what was happening in April-May, which might help ease market concerns about a vicious circle of increasing leverage and slower growth”. UBS’ analysis adds: “We do not think the authorities want to push for a quick de-leveraging, as it will endanger growth. Also, shadow banking activities are
OVERVIEW CHINA 2013
not viewed negatively across the board, but more often seen as useful and diversified means to provide financing to the real economy. It is only the risks in some activities that the regulators worry about.” It continues: “Therefore, going forward, the government is expected to refrain from aggressive tightening of credit or shadow banking activities, though the tighter regulations on interbank credit transactions and higher rates due to June liquidity squeeze should still lead to weaker off-balance sheet credit activity. As a result, credit growth is expected to slow gradually to about 18% by year-end.”
Monthly new lending Monthly new lending
New monthly flow lending (RMB bn)
Index 500 450 400 350 300 250 200 150 100 50 0
Monthly overall credit Monthly overall credit
50
Share in GDP (%, sa, 3mma)
1,100
1,000 900 800 700 600 500 400 300 200 100 0 2004 2005
Nominal new loans (sa, 3mma) New loans/GDP (RHS)
40 30 20 10 0 -10
Corporate bonds held by banks Off-balance sheet credit RMB & FX loans Overall credit
2006
2007
2008
2009
2010
2011
2012
2013
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: Source: UBS CEIC, UBS
Source: Source: UBSCEIC, UBS
16 Special Report September 2013
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September 2013 Special Report 17