Elliot Clarke, an analyst at Westpac, suggests that China’s latest credit data has highlighted that further easing is necessary while private investment a significant concern.

• “Over the past year, Chinese authorities have sought to accelerate the economy by increasing credit availability and lowering its cost. Consequent growth in credit has however been slow in coming.
• In part, this is due to the circumstances that China currently finds itself in, with corporate demand for credit restricted by persistent uncertainty over US trade relations as well as softer global growth.
• In addition to these macro-demand factors, however, anecdotes suggest the supply of credit is also still an issue for business.
• Small and medium private firms won’t be able to access capital markets anytime soon, and more work needs to be done before the quality of lending by shadow banking agents can be relied upon. Hence improved access to credit for small and medium-sized enterprise will have to rely on the banks. Further targeted easing by authorities is, therefore, a necessity, as are broader liquidity measures to reduce the overall cost of credit.
• The bright spot for the short-term however is that, with local-government issuance having accelerated in 2019, infrastructure activity will continue to build in the second half. This activity will provide enduring support for aggregate growth and incomes amid uncertainty, and hopefully elicit a response from public and private corporates in time.”