The View | For all that cash China is splashing out to rev up its economy, where is the growth?

China has been pumping an astounding amount of liquidity into the economy. Unlike money, however, optimism seems to be in short supply.

“All this money being tossed around like an after-party at a rap concert is not generating any notable uptick in activity,” Christopher Balding, a Beijing-based business professor, wrote last week in a piece distributed by the research site Smartkarma.

Total social financing – a measure that takes in bank loans as well as other forms of credit, such as bonds – rose almost 16 trillion yuan in 2015 compared to additional gross domestic product of just over 4 trillion yuan. “That is a tiny boost to GDP relative to the amount of money that was poured in,” Balding says. “Imagine what GDP would have been if Beijing had not been dropping money from helicopters.”

Meanwhile, financing expanded even further in the first quarter of 2016, to levels similar to the 2009 stimulus package.

This credit has been sloshing back and forth between various asset classes. Housing sales have been active, for example, but new housing starts are lacklustre, and brokers such as Goldman Sachs expect developers will be in “destocking” mode for the next two three years. Producers of manufactured goods, meanwhile, have let inventories fall to low levels, a sign that they are not confident enough in future demand to restock.