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New Data: China - Aggregate financing to the real economy
Tuesday, 04 Sep 2018 21:15 ET
By Jacky Cheung
Summary
September 2018 -- Data Buffet now carries the PBoC's "aggregate financing to the real economy" a.k.a. "total social financing" table (eight new monthly series, from 2016).
Detail

Figures are trillions of Chinese yuan (Tril. CNY), end of period (EOP), not seasonally adjusted (NSA). The series start at January 2016.

The series reside in the historical catalog (China » Banking » Aggregate financing to the real economy (AFRE)) and include, for example:

  • AFLFSCNAFTTUM.ICHN  = Aggregate financing to the real economy [AFRE]: Stock - Total, (Tril. CNY EOP, NSA)
  • AFLFSCNALNTNUM.ICHN = RMB-denominated loans
  • AFLFSCNALNTFUM.ICHN = Foreign currency-denominated loans

Because catalog locations are subject to change, the upper-right search box on DataBuffet.com provides a "find in catalog" mode that accepts a mnemonic.

About the dataset

The seven listed categories do not sum to the total, although only the first (RMB-denominated loans) is marked "of which"; this may be a design flaw in PBoC's table, as there are actually ten categories of instrument counted in total social financing. Regardless, in our catalog we have marked all seven as "of which".

Background

Total social financing (TSF) a.k.a. aggregate financing to the real economy (AFRE) is a liquidity metric used by the People's Bank of China (PBoC) to formulate monetary policy. It measures the funds provided by China's domestic financial system to China's private sector, which consists of direct financing via the capital market (stocks and bonds), indirect financing via banks, but not foreign financing (FX, FDI) nor government funding (sovereign debt). The metric was created in 2010 in the wake of the global financial crisis.

The measures are constructed according to the principles of the IMF financial accounts, but several don't match SNA financial asset (AF) categories; instead, they're financial product categories important to China.

TSF was created in part to track the operations variously known as non-bank credit lending, non-standard credit, or shadow banking; these operations are outside the balance sheets of banks and hence non-transparent (i.e., not counted in regulatory filings). Shadow banking exists because there is demand. Macroprudential regulations on banks pertain to balance sheets, and tend to (a) limit the lending capacity of banks, and (b) bias the banks towards state-owned enterprises; so to meet demand from everyone else ("riskier" borrowers such as new or small firms), the banks cooperate with shadow-banking entities to conduct operations that don't show on the balance sheets (i.e., they're off-balance sheet).

Trust companies perform credit intermediation like banks, but are not subject to bank regulation. They are a subset of non-bank financial institutions, and include trusts, brokers, and security firms

Wealth management products (WMPs) are structured and sold by banks as savings products, but are recorded off balance sheets, hence avoid deposit regulation. They include entrusted loans and trust products.

An entrusted loan is organized by an agent bank (trustee) between two other parties, a lender (trustor) and borrower. The trustor is typically a company with idle funds. The trustee charges a handling fee but does not undertake loan risk, so omits the loan from its balance sheet. Such operations have been permitted by PBoC since 2001, but new regulations were enacted by CBRC in 2018. In 2018, there were about 13.9 Tril. CNY / 2.1 Tril. USD outstanding.

A trust product is structure by a which a trust company collaborates with a bank to reach sources of funding (individual or corporate savers). These funds are channeled to riskier borrowers in the form of trust loans.

References

Other
Related ReleaseAggregate Financing to the Real Economy
SourcePeople's Bank of China (PBC)
FrequencyMonthly
GeographyChina, People's Republic of
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