There has been no significant slackening in Chinese lending growth, according to the statistics released today by China's central bank

John Robertson

PortfolioDirect

There has been no significant slackening in Chinese lending growth, according to the statistics released today by China's central bank. Outstanding loans in January were 14% higher than a year earlier. Today, also, the HSBC sponsored purchasing managers index for January pointed to a continuing contraction in manufacturing activity. Industry coverage in the bank's flash estimate is narrower than for the later final estimate and narrower still than the government's own measure which is usually released on the first day of each month. Taking the HSBC number at face value, however, suggests that Chinese borrowers are getting far less bang for their buck. The widening disparity between lending growth and economic activity suggests that China is failing to get an adequate return on its investment spending. The longer this goes on, the worse the growth record is likely to become.


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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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