China keeps chokehold on shadow banking

Aggregate financing falls to RMB856.4 billion.

The People’s Bank of China said new renminbi loans sank to RMB506.1 billion compared to the RMB 580 billion median estimate by analysts, who suggests authorities are trying to keep shadow-finance risks in check.

Slower credit, however, will crimp growth while limiting risks of a financial crisis. China’s leadership wants to replace debt-fueled growth with consumer-led growth

Analysts said these moves confirm their view that monetary policy has tightened and growth will slow in the future. They also expect new bank loans and aggregate financing to decline this quarter from the previous period’s high levels.

Aggregate-financing projections ranged from RMB1 trillion to RMB 1.35 trillion, with a median of RMB 1.12 trillion, following RMB 1.4 trillion the previous month and RMB 1.29 trillion in October 2012.