Caixin
Mar 17, 2021 08:10 PM
DAILY CHART

Charts of the Day: Balance Sheets Swell in China’s Financial Industry

The total assets and liabilities of China’s financial industry both grew at an faster pace in 2020, central bank data showed, amid monetary stimulus designed to offset the fallout from the Covid-19 pandemic.

Total assets rose 10.7% year-on-year to 353.2 trillion yuan ($54.3 trillion) at the end of 2020, while total liabilities increased 10.8% to 321.2 trillion yuan, with both growth rates higher than each of the previous two years, according to data released Monday (link in Chinese) by the People’s Bank of China.

COTD 1

With total financial assets at more than three times China’s GDP last year, the figures show the effects of policymakers’ efforts to support the financial system with liquidity to encourage lending to businesses, especially small and midsize companies. Although the goal was to offset the economic damage caused by the pandemic, some experts have expressed concern about the rising levels of debt in the economy.

The finance industry’s leverage ratio remained more or less flat over the course of last year, according to a report (link in Chinese) from the National Institution for Finance and Development, a state-backed think tank.

But expanded credit helped push up the debt levels of nonfinancial companies, governments and households, whose leverage ratios rose by 10.4, 7.1 and 6.1 percentage points, respectively, the report said.

Last year, the banking sector remained the dominant player in the financial industry. The combined assets of banking institutions at the end of the year made up 90.5% of the total, while their total liabilities accounted for 91.3%, according to the central bank data.

COTD 2

The securities sector’s assets and liabilities, which swelled 25% and 29.3% respectively last year, both grew faster than those of the banking and insurance industries amid a buoyant stock market. The benchmark Shanghai Composite Index rose nearly 14% on the year.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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