China's bank loans as a share of funding in the economy may have fallen to a record low, highlighting the growth of alternative financing channels that have prompted warnings of rising credit risks.

New yuan loans probably dropped 14 percent last month from a year earlier, according to the median projection in a Bloomberg News survey of 37 analysts ahead of data due by Jan. 15. That would give bank lending a 55 percent share of aggregate financing for 2012, based on UBS AG estimates, the least in figures dating to 2002.

The decline underscores the waning ability of official loan data to capture the scale of debt in the world's second-largest economy as borrowers and investors turn to less-regulated, higher-return shadow-banking products. The People's Bank of China is putting greater emphasis on aggregate financing and the International Monetary Fund says the growth of nonbank credit poses "new challenges to financial stability."

"China's economic performance in 2013 will be significantly affected by how seriously Chinese regulators are going to treat non-bank financing," said Shi Lei, a Beijing- based analyst with broker Founder Securities Co., who has provided research advice to China's securities regulator. While a hands-off approach will help the economy, a crackdown "would be really bad for growth."

The PBOC lending figures are among December data in the coming days that will show whether an economic rebound that began in September picked up or slowed last month after a seven- quarter growth slowdown. Trade figures due tomorrow may show exports rose at a faster pace and a Jan. 11 report may indicate inflation accelerated.

Growth Pickup

The government will release fourth-quarter gross domestic product as well as December industrial production, retail sales and fixed-asset investment on Jan. 18. Economic growth probably accelerated to 7.8 percent in the quarter from a year earlier, up from a three-year low in the previous period, according to a Bloomberg News survey last month.

China's benchmark stock gauge, the Shanghai Composite Index, has gained 16 percent since an almost four-year low on Dec. 3 on signs the economy is picking up.

The PBOC in April 2011 started providing data on aggregate financing, which includes bank and non-bank lending, on a trial basis as part of the release on loan and money-supply statistics.

In September 2012, the central bank began issuing a separate monthly press release on the broader indicator, emphasizing it by waiting at least five hours before putting out the monetary figures. The PBOC also gave historical data for the previous decade, illustrating how bank loans have declined from their 2002 share of 91.9 percent.

Closer Correlation

Sheng Songcheng, head of the PBOC's statistics department, said in 2011 that aggregate financing is more closely correlated with GDP and inflation than new yuan loans. The slice of funding may shrink further amid China's "rapid development of financial innovation," the PBOC said in September.

Aggregate financing, also called total social financing, includes banks' yuan loans and six other categories: foreign- currency loans, entrusted loans, trust loans, bankers' acceptance bills, corporate bonds and non-financial stock sales.

"As trust loans, bonds and other non-bank financing grow, the central bank has a full reason to promote the new indicator," said Joy Yang, chief Greater China economist at Mirae Asset Securities (HK) Ltd. in Hong Kong, who previously worked at the IMF.

Deposit Pools

Trusts typically offer better rates of return than banks, pooling deposits from businesses and households to invest in real estate, stocks, bonds, commodities, or other assets.

Lending by so-called trust companies surged five times to 1.04 trillion yuan ($167 billion) in the first 11 months of 2012 compared with the whole of 2011. A "large part" of the sector's lending is to higher-risk entities including local-government investment vehicles and property developers, and investors may underestimate risks, the IMF said in its Global Financial Stability Report in October.

The PBOC may also say that China's foreign-exchange reserves, the world's largest, rose to a record $3.32 trillion at the end of December from $3.29 trillion three months earlier, based on the median estimate of seven economists. M2 money supply probably rose 14 percent in December from a year earlier, up from a 13.9 percent gain in November.

Tomorrow's customs administration report may show exports rose 5 percent last month from a year earlier, up from 2.9 percent in November, while imports gained 3.5 percent after being unchanged the prior month, based on analyst estimates. Overseas shipments gained 13.4 percent in December 2011.

"The major drag in the near term lies in the external sector," Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong, wrote in a Jan. 7 note.

Consumer prices may have increased 2.3 percent in December, the fastest rate since May, in statistics bureau data due Jan. 11. McDonald's Corp., the world's largest restaurant chain, raised some menu prices in China because of higher labor and input costs, the company said Jan. 7.

--Zhou Xin, Kevin Hamlin. With assistance from Cynthia Li in Hong Kong. Editors: Scott Lanman, Sunil Jagtiani

--Courtesy of Bloomberg