How things REALLY work in China!

It appears that upsurge in bank lending China reported in Janruary is a sham. Here are two phenomenal examples from Michael Pettis on SeekingAlpha.

There are persistent rumors that part of the increase in bank lending consisted of putting back on balance sheet loans that were taken off balance sheets in 2007 and 2008 when the PBoC was trying to constrain bank lending. It isn’t really new credit.

Brilliant! Bring bad loans back on the books, and Voila! more lending! It's a good thing I don't live in China. The temptation to cheat would be very high. This next one's even better:

there is clearly an increase in lending games aimed at making policymakers happy by showing fat loan books. One of my students just visited me today with an example that involved his father. I don’t want to get into too much detail, for obvious reasons, but the net effect of the transaction involving his father was that an entity was created to borrow money from a bank, the proceeds of which were deposited in a CD, which was then assigned in
ownership to the real borrowing entity, which then used the CD as collateral for the “real” loan. Aside from the complications used probably to get around credit restrictions, one single loan was recorded as two loans plus a CD deposit.

Awesome! Money gets put in a CD and is called a doubling of credit. Sounds like someone in China deserves a promotion for this brilliant thinking.