I've suspected that official credit has been bleeding into the shadow banking system (why would it not), dumping more credit into a sky-high multiplier.
Guest post: China’s private banks are fuelling bubbles
In the city of Longyan, in southern Fujian province, there is even evidence of state bank employees taking out loans for personal use, as they are entitled to, only to deposit the proceeds in a private bank and earn the arbitrage.
The lesson is that even the PBOC, masters at administrative tightening, are struggling to prevent the country’s excess liquidity from being put to speculative use, even as sources of credit for the real economy dry up.
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