China is succumbing to a lending slowdown even as signs emerge of better market liquidity, a “credit paradox” that BNP Paribas Asset Management believes masks an improvement in confidence and financing.
Despite a rare contraction of yuan-denominated new loans in July, total social financing — which also includes capital from bond sales and credit extended through shadow banking — minus equity issuance shows “a gradual recovery,” according to Chi Lo, a Hong Kong-based senior strategist at the firm.