Research analysts at Nomura argued that the month of December saw a strong credit growth in China, which may help offset capital outflows.
“Strong credit growth may reflect rising domestic credit demand from the corporate sector to offset capital outflows. Corporate loans rose to RMB496.0bn in December, but we are cautious about taking it as a sign of rising aggregate demand.”
“With CNY depreciating and capital outflows continuing, as evidenced by the USD41bn drop in the central bank’s FX reserves, the corporate sector could demand more domestic credit to meet liquidity needed to run its businesses.”
“Fund flows among corporates, households and the government have followed normal patterns, which do not point to a surge in corporate demand for funds.“
“Meanwhile, loans to the household sector moderated to RMB497.3bn from RMB679.6bn in November, reflecting cooling property sales in December.”