China likes to pretend that it’s not unleashing credit stimulus but it is. New yuan loans for June are out and evidence is unequivocal. Total social financing was at 3.43tr yuan with banks accounting for 1.81tr of that:
Shadow banks are back in a big way:
The surge in new loans is obvious year on year:
And in rolling annual terms:
M2 has blasted off:
And broad credit has begun a new stimulus cycle:
Another credit-saturated Chinese growth round is upon us. Sadly for it, it will be weaker than those in the past given the declining marginal impact of new credit on growth, horribly exacerbated by effectively bailout credit that will only keep ponzi-borrowers alive rather than add to growth.
Even so, empty apartments and bridges to nowhere are now more important than ever to the CCP social contract so expect strong demand for bulk commodities.
With the bill in the long run mounting ever higher.