Shadow Banking in China Appears to Have Made a Roaring Comeback

shadow credit... rose sharply to 479 billion yuan ($69 billion), after having dropped to 55 billion yuan in October.

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The surprise rebound may be a reaction to expectations for continuing yuan weakness as companies look to increase their local-currency liabilities at the expense of dollar-denominated obligations.

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Efforts to curtail shadow lending may exacerbate this month's liquidity squeeze, as the yield on 10-year government bonds shoots up to 3.24 percent from 2.74 percent at the end of October -- their highest level in more than a year.