Despite China reporting solid economic data on Monday, with beats across the board in everything from retail sales, fixed asset investment, industrial production and GDP printing at 6.9% and on track for its first annual increase since 2010...
Overnight China released its latest monthly credit data which showed that even as China is trying to choke off its shadow banking sector, something we showed most recently last month when we discussed the biggest crash in net bond issuance on record, credit to the broader economy continues to flow, although it comes as M2 crashed to a new all time low and has prompted some nervous analysts to say that even this "crazy" loan creation number may not be enough.
An advisor to China's central bank, Sheng Songcheng, said that virtual currencies like bitcoin are assets but do not have the fundamental attributes needed to be a currency that could meet modern economic development needs. Speaking in an interview with financial magazine Yicai, the PBOC advisors said that the adoption of Bitcoin as a national currency by a country "could lead to its economic collapse."
According to official PBOC data released two weeks ago, the Chinese foreign exchange stockpile rose by $24 billion in May, the fourth consecutive month of increases, taking it to $3.056 the highest level this year, easing concerns about ongoing capital flight and preventing a self-fulfilling prophecy of capital outflows prompting more capital outflows. There is just one problem: China appears to have lied again.
One day after China's rate policy unexpectedly decoupled with the Fed, and in light of recent developments in China's loan market discussed last night, Goldman's MK Tang writes that the firm has "received a number of inquiries on yesterday’s China money and credit data, as well as recent PBOC rate actions." To answer all lingering questions, Tang has published the following handy Q&A "to link these issues together by answering some of the key questions."
China: Q&A on money and rates