China Credit Impulse
As recently as early 2021, China was building its way out of the pandemic in a credit-fueled construction boom that sucked in raw materials from across the planet and helped drive a broad commodity rally. Around that time, Federal Reserve researchers concluded that China’s credit policies explained more than one-fifth of all commodity-price movements since the global financial crisis. In a separate study, they estimated that when China’s credit impulse rose by 1% of GDP, it delivered a matching boost to global trade – and a 2.2% increase in commodity prices – as well as lifting the Chinese economy.
Source: Bloomberg