China credit flow

I was surprised the China credit data from yesterday didn’t get more airplay. From what media I saw referencing it, the general view was that it was sound/strong/expansionary.

I thought it quite weak tea, and whilst the government is trying to step up, everyone else is pulling back.

Not major, but not nothing either, something that continues to point to the difficulty in stimulus getting traction. In turn, that’s because the stimulus is part of the problem, & none of the things that would help the root cause are being tabled.

I.e., there is already vast oversupply and inefficient investment in property and infrastructure, with a massive bubble in residential slowly deflating, and as a result changed household (e.g. the buyer) expectations about prices moving forward.

There is vast overcapacity in much of manufacturing, and keeps causing China to come into conflict with trade partners when they try (as in the case of EV’s, and relatedly steel) to export the excess abroad.

The only thing to fix the problems (including the adverse demographics) is to try and raise the household share of income, and that doesn’t involve lots of iron ore and coking coal.

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