FACTBOX-What is China’s total social finance indicator?

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SHANGHAI, Nov. 13 (Reuters) – The “social total
financing ”(TSF), a liquidity measurement tool invented by
Beijing in 2011, emerged as a better indicator of
monetary than traditional measures of money supply.

It was created to help Chinese leaders keep tabs on
fundraising as the financial system diversified
state-controlled police loans.

** DEFINITION

The TSF is an economic barometer which sums up the total
fundraising by Chinese non-state entities, including
individuals and non-financial companies.

The TSF measures the money offered by national suppliers, mainly
by financial institutions, but also by Chinese households and
non-financial entities.

As such, it offers a view of both borrowers and lenders.

It excludes government bond products, which are used
for public expenditure and deficit coverage, as well as all
foreign-related items, such as foreign direct investment (FDI)
and debt abroad.

“The TSF is a concept of added money, indicating the total funds
the real economy obtained from the financial system on a
certain period of time, ”indicates the definition of the central bank.

** COMPONENTS

The TSF is divided into yuan loans from banks,
foreign exchange loans, trust loans, bank acceptance invoices, businesses
sales of bonds and shares of non-financial institutions.

People’s Bank of China (PBOC) requires banks to offer
loans in yuan based on official interest rates, although this year
left some leeway for banks to offer slightly divergent rates.

The central bank does not intervene directly in the fixing
interest rate for other types of products in the TSF.
However, the government can influence rates indirectly by
state banks, which play a major role as buyers of other
forms of debt and equity.

The central bank can also use open market operations tools
such as reverse repurchase agreements to guide the market
interest rate expectations.

(Reporting by Lu Jianxin and Pete Sweeney; Editing by John
Mayor)

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