Increase in Chinese lending raises alarm bells

|By:, SA News Editor

China's aggregate financing grew for the first time in four months in August, rising to 1.57T yuan ($257B) from a 21-month low of 808.8B yuan in July and topping consensus of 950B yuan.

Growth in bankers' acceptance bills and entrusted loans indicate a pick-up in shadow banking, which has caused so much nervousness over recent months.

While the increase in financing may be helping the economy, says SocGen economist Yao Wei, it only "adds to the downside risk," as Chinese corporations and local governments become ever more indebted.

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