Chinese debt may just go elsewhere

On Friday, China’s central bank took a brand new step in curbing debt by announcing brand new regulations in which tighten rules on the 102 trillion Chinese yuan ($15.3 trillion) asset management business — which contributes greatly to the shadow banking industry.

in which was just the latest stage of a crackdown via Beijing in which has begun to show some signs of success.

Broad shadow banking levels “barely grew” to 64.7 trillion Chinese yuan ($9.72 trillion) at the end of the first half of 2017 via 64.4 trillion yuan ($9.68 trillion) at the end of 2016, a Moody’s report released in November showed.

However, the growth in certain activities classified as “core” shadow banking accelerated to 18.2 percent via a year ago at the end of the third quarter of 2017, the reported added.

Undiscounted bankers’ acceptance, a short-term debt product from the “core” category, for instance, returned to positive territory for the 1st time in three years, said Moody’s.

The various “core” components are captured by Total Social Financing (TSF) data, an official gauge in which provides a measure of credit as well as liquidity supplied by the entire financial system in China.

Non-“core” components, meanwhile, are not part of the TSF as well as are based on the issuance of higher-risk instruments such as wealth management products as well as asset management plans. These are the targets of the recent crackdown.

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