Economics | 9 December 2021 Analyst certifications and other disclosures on last page. This research report has been created by CCB International Securities Ltd. 1 信贷增速受政府融资推动小幅上升。11月中国社会融资总额（TSF）同比增长10.1%，较上月小幅回升，信贷增速继续呈现企稳迹象。新增政府债券发行强劲，是本月信贷增速小幅上行的主要驱动因素，影子银行活动仍在收缩。私人部门的信贷增长温和放缓。 PPI通胀如预期放缓，食品通胀加速上行。由于近期国内政策措施抑制了原材料价格上涨，加上全球大宗商品价格涨幅有所放缓，近月来对 PPI 上涨贡献最大的上游价格有所回落。然而食品价格环比加速上涨，推动了本月CPI 上行，但上行幅度被服务价格拖累。 政策预计进一步宽松, 关注价格压力。政治局会议释放的政策信号表明，来年稳增长将会是经济政策重点。财政发债支持跨年社融增长，存款准备金率可能进一步下调，但价格压力將是大规模放松流动性的制约，近几个月的食品价格的加速上涨尤其值得关注。 Credit growth edges up on government borrowing. China saw another sign of stabilization in the form of total social financing (TSF), which rose 10.1% YoY in Nov, up slightly from the month before. Strong net issuance in government bonds was the main driver as shadow banking continued to diminish. Credit growth to the private sector eased along with bank lending. PPI inflation eases as expected, food CPI accelerates. Upstream prices, which contributed most to the surge in PPI, eased in the recent month owning to domestic policy measures to contain rising prices in raw materials and the slowing rise in global commodity prices. Food prices, meanwhile, continued to accelerate, contributing to rising CPI, though the rise was offset by a contraction in services prices. Easing policy stance expected, while price pressure is noteworthy. The latest Politburo meeting suggests that stable growth will be a priority next year. Government bond issuance is expected to provide support to credit growth entering next year, while RRR could be cut further. However, price pressure is likely to remain a constraint for large-scale monetary easing. The acceleration in recent months’ food prices is noteworthy. Lulu Jiang (852) 3911 8012 jianglulu@ccbintl.com Li Cui (852) 3911 8274 cuili@ccbintl.com Ying Zhang (852) 3911 8241 zhangying@ccbintl.com CCBI SECURITIES | RESEARCH China Economics Update: Credit growth edges up on government borrowing; PPI eases, but food prices accelerate more than expected 中国经济评论: 政府融资推动社融增速小幅回升；工业价格回落，食品价格加速上升 Economics | 9 December 2021 CCBI SECURITIES 2 TSF continues to show signs of stabilization, details still mixed Total social financing rose 10.1% YoY in Nov 2021, up 0.1ppt from Oct as the credit slowdown since Mar has since stabilized. New TSF increased by RMB2.61t, slightly lower than market consensus expecting RMB2.69t. Of the total, new loans underperformed, coming in at RMB1.27t (CCBIS: RMB1.7t, cons: RMB1.5t). Other components were mixed, shadow banking continued to contract, while government and corporate bond new borrowing improved since last month (Fig 1). In particular,  New yuan loans increased by RMB1.27b, lower than either our or the market expectation. Medium- and long-term (ML) loan growth eased 0.4ppt to 12.9% YoY. Mortage lending growth stabilized at 14.8% YoY, but ML loan growth of the corporate sector slowed notably by 0.6ppt to 11.9% YoY. Short-term and bill financing increased from the prior month and in YoY terms.  Outstanding corporate bonds grew 7.7% YoY, the highest pace of growth since May this year. This was accompanied by improvements in net domestic corporate bond issuance of RMB 410b in Nov, about 2.5x the past two-month average.  Total renminbi loans and corporate bonds, which represent credit to the private sector, rose 11.2% YoY in Nov, down sligtly from Oct, of which renminbi loans moderated 0.2ppt to 11.7%.  Government borrowing, including outstanding CGB and LGB, grew 15.1% YoY, 0.8ppt higher than the month before, driven by accelerating local government bond issuance, up 17.4% YoY or 2.9ppt.  Shadow banking items (entrusted + trust + bills) declined 12.8% YoY, a 0.4ppt decline from Oct. Despite still being a drag on overall TSF growth, the drag was mainly from faster deceleration of trust (-29.3% YoY vs. -27.6% YoY), likely reflecting the continued squeeze in the property funding channel. M2 growth rises. M2 grew 8.5% YoY in Nov, lower than estimates (CCBIS: 8.8%, cons: 8.7%). M1 growth ticked up 0.2ppt to 3.0% YoY. The development of M2 was consistent with easing new loans compared with the same time last year (Fig 3). PPI eases, CPI inflation accelerates on higher food prices China’s Nov factory price inflation eases. PPI inflation came in at 12.9% YoY in Nov, in line with our expectation of 12.8% YoY, but much higher than market consensus for 11.7% YoY. With the government recently implementing policy measures to strengthen supply and curb price surges in coal and industrial metals, PPI sequential growth was flat in Nov. After surging by an average of 16% MoM in the past two months, coal prices contracted 4.9% MoM in Nov while PPI for ferrous and non-ferrous metals declined 4.8% MoM and 1.2% MoM, respectively, contributing to easing PPI. CPI inflation picks up on rising food prices, but head