But only 10% were made to manufacturers, says Nicholas Lardy of the Peterson Institute.
Thus, Lardy finds that when interest rates decline, households tend to save more.
"Now they have a very large market share in China and have begun to export, " says the Brookings Institution's Lardy.
"The private sector is where the jobs are being created and the growth is coming from, " says China specialist Nicholas Lardy of Washington, D.
Nicholas Lardy of the Brookings Institution notes another reason for the outflows: a huge increase in trade credit extended to foreign (mainly South-East Asian) buyers of Chinese goods.
But Mr Lardy argues against ending the capital-outflow scare.
The most fruitful reform, notes Lardy, would be to end financial repression by liberalizing interest rates, which would increase real rates on deposits, thereby decreasing saving if the income effect is strong, and increasing consumption.
Thus, Lardy looks at bank loans by firm size, assuming private firms are mostly small enterprises, and finds that their share of new loans made under the stimulus program exceeded credit going to larger enterprises.
Lardy and others argue that one way to increase consumption in China is to extend the social safety net to include rural residents, who now have to pay most of the costs of education, health, and retirement.
The Washington Post cites Nicholas Lardy, a respected China-watcher at the Peterson Institute, as saying that urban housing stock accounts for 41% of household wealth in China, compared to 26% in the U.S., though mortgage lending is much more restrictive in China.
FORBES: Standard Chartered Sees Chinese Housing Rebound In 2013
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