China’s $9 Trillion Shadow Banking System Shrinks For The First Time In 9 Months

zerohedge.com / by Tyler Durden / Aug 15, 2017 3:04 PM

On the surface, the latest Chinese credit data reported overnight by the PBOC was not particularly memorable: new loans tumbled from the near record 1.540TN Yuan in June to only 825.5BN in July, just above the 820BN expected, while Total Social Financing also declined substantially from June’s 1.78TN to 1.22TN, also beating the 1TN estimate. While both July prints were a steep drop from June – reflected in Monday’s miss in retail sales, industrial production and capex – they were a significant increase from the year ago numbers. At the same M2 dropped to a new record low, sliding from June’s 9.4% to 9.2% in July, missing expectations of a modest rebound to 9.5%.

And while there are more details on the various constituent components below, there was one remarkable aspect to last night’s number: for the first time in 9 months China’s $9 trillion Shadow Banking Industry – defined as the sum of Trust Loans, Entrusted Loans and Undiscounted Bank Loans – contracted. These three key components combined resulted in a 64BN yuan drain in credit from China’s economy, the first negative print since October, seen by analysts as more evidence that Beijing’s campaign to contain shadow banking and quash risks to the financial system, is starting to bear fruit.

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