“VERTIGO!”: CHINA BALLOONING CREDIT

China's credit data reminded us again that China’s ballooning credit growth continues unabated.

What might be less obvious is there is really no more room to grow without a “vertigo” feeling. China private credit is already larger than that of the EU. If we consider that China’s income per capita is less than one third of the EU, this is even more astonishing as a country’s financial deepening tends to be aligned with its income per capita.

Moving forward, the ongoing reflation of China’s economy will still need ample credit and it is hard to see this trend reversing. PBoC governor Zhou said it all by considering deleveraging a medium term goal (i.e. secondary priority). Do not bet on deleveraging just yet!