China's social financing set to hit record high

[SHANGHAI] China is planning a record-breaking expansion of social financing this year which will make forecasting monetary policy more difficult, even as Beijing adopts lower growth targets for traditional money supply.

Total social financing (TSF), a homegrown indicator designed to measure overall liquidity in China's real economy, is set to reach another record high in 2013, thanks largely to the increasing popularity of fund-raising channels like trust loans and bonds at the expense of traditional bank lending.

TSF sums up total fund-raising by Chinese non-state entities, including individuals and non-financial corporates, and has grown in importance as Beijing tries to diversify the financial system away from state-controlled policy lending. Beijing does not publish an official target for TSF, but Jiao Jinpu, head of the PBOCs' consumer protection bureau, told a forum over the weekend that TSF is likely to grow by around 16.7 per cent in 2013, local media reported. This would mark a slowdown from last year's 22.85 per cent, but still implies a record 18.4 trillion yuan (S$3.6 trillion) in new TSF fund-raising this year.

The fact that bond and trust loan markets are not directly controlled by Beijing makes predicting their growth - and its impact on monetary policy - more complicated.

Source: http://www.businesstimes.com.sg/premium/china/chinas-social-financing-set-hit-record-high-20130118

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