Social financing shoots up

China's total social financing aggregate, a broad measure of liquidity in the economy, saw an annual growth rate of nearly 23 percent from 2002 to 2011, reflecting the financial system's support for the real economy, the People's Bank of China, the country's central bank, said Thursday.

The total social financing aggregate rose to 12.83 trillion yuan ($2.03 trillion) in 2011 from 2 trillion yuan in 2002, according to the central bank, an annual growth rate of 22.9 percent, which was 6.1 percentage points higher than the growth rate of new yuan-denominated lending during the same period.

The social financing indicator is as important for China's macroeconomic policies as yuan lending, as the country's financial system has become more sophisticated in the past decade, and the yuan lending volume can no longer fully reflect the relationship between finance and the real economy, the central bank said in a statement on its website.

Yuan lending accounted for 91.9 percent of the total social financing in 2002 but the share shrank to less than 60 percent in 2010, data from the central bank showed.

China began to publish social financing figures in 2011, with the aim of maintaining a reasonable social financing scale. Currently the indicator includes loans denominated in local and foreign currencies, entrusted loans, trust loans, bank acceptance bills, corporate bonds, equity financing, foreign direct investment and foreign debt.

By using the concept of a total social financing aggregate, policymakers can strengthen regulations for off-balance sheet lending and prevent risks in the financial system, the statement said.

When conditions are mature, financing from private equity funds and hedge funds will be included in the calculation of the total social financing aggregate, said the central bank.

The statement came after the central bank took the unusual move Tuesday of releasing August figures for social financing ahead of those for new yuan lending.

"The central bank wants the market to pay more attention to total social financing figures rather than credit issuance by banks, even though the latter accounts for more than 50 percent of the total social financing aggregate," E Yongjian, an analyst at Bank of Communications, told the Global Times.

"In the long term, the proportion of bank loans (in social financing) will continue to decrease," he said.

In August, total social financing stood at 1.24 trillion yuan, up from 1.04 trillion yuan in July, mainly boosted by corporate bond issuance and trust loans, the central bank data showed.

The figure is higher than expected, indicating that China is increasing its financial support for the real economy, Shenyin & Wanguo Securities said in a research note Wednesday.