This China Center members-only chart shows the Chinese banking system’s monthly new claims on the corporate and household sectors (i.e. loans into the real economy) as well as new claims on depository corporations and financial institutions (i.e. interbank lending). Recently, turnover in interbank lending has risen rapidly, regularly outpacing credit creation in the real economy by a substantial amount. Additionally, lending in the interbank market has become increasingly volatile, mirroring recent movements in the deposit base.

While the sheer size of growth in the interbank market is daunting, the large monthly turnover is potentially even more dangerous.  Please download the full chart for a complete explanation.