Shadow banking understates overall China leverage, Moody's says

The rating agency said overall leverage in China's economy continued to rise with credit growth outpacing the rise in nominal gross domestic product (GDP). "The growth in overall leverage may be understated, because some of the fastest growing components of shadow banking are not included in TSF (total social financing)," said Michael Taylor, Moody's chief credit officer for Asia Pacific. ... "We estimate the potential understatement to be significant, amounting to at least RMB16 trillion ($2.4 trillion) or 23 percent of GDP at end-2015, equivalent to around one-third of shadow banking," Taylor added.