Hi Patrick -- thanks for sharing this chart. I wonder, though, about your inclusion of FI loans to non-bank FI as that will includes lots of funding of shadow credit that gets picked up in TSF, so you end up with double-counting on the way up (in 2015-6) and double-deductions now
#China’s ongoing deleveraging in 2018 has made its economy more efficient
. It now takes 2.7 renminbi of new debt to generate one renminbi of additional GDP
. This is the best ratio since 2012, lower than 15-year average and down from a peak of 6.8 just two and a half years agopic.twitter.com/r2sKAsVfJX
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1/ Hi Simon, thanks for sharing yours! A simplified picture of China shadow banking shows that FI loans to non-bank FI are likely to be partly captured in TSF (trust & entrusted loans) but some part are not captured in ‘shadow loans ‘. Is it big ?pic.twitter.com/Xddl3HzGNi
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2/ Hard to say, but FI loans to NBFI have been much larger than the sum of trust & entrusted loans (up to 10% of GDP) and their respective evolutions have been totally uncorrelatedpic.twitter.com/1XKRGekg0U
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3/ I agree that there must be some double-counting which – as you rightly pointed out – amplifies the movement on the up & downside. However, assuming a full double counting and thus excluding trust & entrusted loans do not change the picture muchpic.twitter.com/8ij7iysXax
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It certainly helps when the Chinese economy is growing at its slowest pace in nearly 30 years.
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But still 2 time or 3 time faster than that of USA....
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If you believe chinese macro data.
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Is it necessarily bad to spend 2.7 and get 1 in return? Because one needs to account for assets it generated, and future revenues that will go on over next years. What is considered a good ratio? For example if EBIDTA is 30% in above case, ROI is about 9 years it is high
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@georgemagnus1. Would be great to get your thoughts on above China points if you have some time. Thanks.Thanks. Twitter will use this to make your timeline better. UndoUndo
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