The Conference Board uses cookies to improve our website, enhance your experience, and deliver relevant messages and offers about our products. Detailed information on the use of cookies on this site is provided in our cookie policy. For more information on how The Conference Board collects and uses personal data, please visit our privacy policy. By continuing to use this Site or by clicking "OK", you consent to the use of cookies. 
China Center Chart of the Week: Credit growth in H2 – onward and upward

This chart examines various scenarios for credit growth in the wake of the Chinese government’s recommitment to its 7.5 percent GDP target at the Central Economic Work Conference back in March.

The best case for China’s debt expansion this year, in our view, would involve Total Social Financing growth of about 18.4 trillion RMB, leading just the private sector’s debt burden to rise to close to 200 percent of GDP – a 15 percentage point increase for the third year running and an unprecedented pace of debt accumulation by Chinese standards. Moreover, it’s not unlikely that credit growth will sustain its current rate or increase further throughout the year – both leading to even higher debt levels than the aforementioned base case.

The key point to recognize is that as long as China’s current credit dynamics remain in play – and the credit intensity of growth continues to rise – fundamental reforms will necessarily have to be sidelined. This is the Catch-22 China finds itself in; the eventual extraction, when it comes, will be painful.

Share
  • LINKEDIN
  • EMAIL
  • TWITTER
  • FACEBOOK
Share

Pricing
China Center Publications (2 pgs)
Members: Sign in to see if this product is complimentary with your membership.
Non-members: Not available
(Click here to learn more about membership
)