M2 Spikes in December, But Trend Still Down

M2 grew 1.3 percent in December, but the 3-month growth remains in downtrend.

SCMP: China credit expansion exceeds estimates as loan demand rises in December
The economy ended last year on a strong note as producer prices rebounded, factory activity stabilised and corporate profit recovered. Businesses are showing more willingness to borrow, with private investment expanding in recent months after slow growth in early 2016.
China is trying to do three things at once: squeeze a credit a real estate bubble, defend the currency, grow the economy. Except the latter requires faster, not slower, credit growth. Major supply-side reforms such as further removing Chinese state influence from the economy could deliver growth without the need for credit, but...

Bloomberg: China Is Planning a New, Relaxed Approach to Growth
"China’s reaching the point where it has to pick its poison and giving up a half percentage point of growth would be far less politically damaging than instability in the bond or currency markets," said David Loevinger, a former China specialist at the U.S. Treasury and now an analyst at fund manager TCW Group Inc. in Los Angeles. "Looking past the Party Congress later in the year, President Xi Jinping may realize that unlike his predecessor, Hu Jintao, he can’t kick the can to his successor, even more so if he plans on extending his term" beyond 2022.

As many as five out of seven members of the nation’s top leadership committee are expected to be replaced at a twice-a-decade Communist Party Congress later this year, a gathering that traditionally spurs a greater emphasis on maintaining stability.

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