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China Foreign debt has soared after contracting in 2015 and 2106 we have seen a third consecutive quarterly increase by Q2 2017  in lending to China the BIS reports. The annual growth rate is now a brisk 25% The banking systems with the largest claims are United Kingdom, United States, Japan, Chinese Taipei and France. China has effectively transferred much of their leveraged paper debt to other nations.

Foreign Banks Loans to China

The BIS report states most of the latest increase in cross-border claims on China took the form of interbank lending as well as intragroup activity between the mainland and overseas offices of Chinese and foreign banks. However even if intragroup activities are excluded, foreign banks' claims on China are once again increasing. The conern is that China has been adding to more paper debt through stock market, property and commodities. All these markets have been pushed up with the massive amounts of debt. 

According to the BIS consolidated banking statistics (which include foreign banks' cross-border claims on China as well as the local claims of their mainland affiliates), the outstanding consolidated claims of foreign banks rose to $750 billion on an ultimate risk basis at end-June 2017, up from a low of $656 billion in early 2016 but still below their 2014 peak.

There have been concerns about the Shadow Banking being understated by China and also the same BIS report shows that China is actually taking on my credit than advanced economies and other emerging nations.

Source: BIS international banking statistics at end-June 2017 Report October 2017

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