China’s total social financing (TSF), a broad measure of credit and liquidity in the economy, more than doubled to an all-time high of 3.74 trillion yuan (544 billion US dollars) in January 2017, from 1.63 trillion yuan (237 billion US dollars) in the previous month, according to data released Tuesday by the People’s Bank of China.

TSF in China refers to loans to the private sector. It is the volume of financing during a certain period of time provided by the whole financial system to the real economy, which incorporates domestic non-financial enterprises and households. 

"The high TSF figure nearly eliminates the possibility for China to deleverage," said Zhou Hao, Asian senior economist at Commerzbank.

Money demand had been transferred from inside banks’ balance sheets to outside, given the tight controls from regulators, according to Wen Bin, chief analyst for China Minsheng Bank.

Apart from a surge in TSF, Chinese banks extended 2.03 trillion yuan (296 billion US dollars) in new yuan loans in January, which was the second-highest monthly tally on record. It nearly doubled 1.04 trillion yuan (151 billion US dollars) loaned out in December last year with a smaller-than-expected increase.

Some economists agreed that the new loan total reflected the central bank’s efforts to slow loan growth. The central bank has conducted “window guidance” or “suasion” to persuade banks to control loan supply since mid-January.

Some economists suggested that China now faces a difficult choice: whether to increase GDP or to control credit growth. 

"The point is GDP growth target. Once you have a GDP growth target, you have a credit growth target," said Michael Pettis, an economist from Peking University in Beijing. 

"Even regulators want to control credit growth. They cannot be successful because either you miss GDP growth targets or you must have faster credit growth," added Pettis. “If China sticks to GDP growth target and constrains loan growth, somewhere else must see credit growth.”

Meanwhile, M2 in January increased 11.3 percent year on year. It is a measure of the money supply, including cash, checking deposits, savings deposits, money market securities, mutual funds and other time deposits.