China braces for tighter credit policy in 2013

“Controlling risks” is the top policy objective.

According to Nomura, the China Banking Regulatory Commission (CBRC) held a conference today and identified "controlling risks" as the top policy objective for 2013. This reinforces its view that credit growth, as measured by the total social financing, likely peaked in H2 2012 and will decline in 2013 as the government tightens controls on shadow banking activities.

“We expect macro data to remain strong in H1 2013 and GDP growth to be 8.1% as policy easing in H2 2012 feeds into the real economy, but we believe the recovery is not sustainable and GDP growth will likely slow to 7.3% in H2 2013 driven by a decline in credit growth.”