We just returned from a trip interviewing banks and local lenders in Fujian Province and Shanghai. These local lenders include pawn shops, private families, and small businesses. They provide short and medium-term loans to consumers. Two points jumped out: 1) Consumers are leveraging up by withdrawing equity from their assets, mainly property and autos. This is a negative indicator for China’s economy. 2) Banks and other non-bank are drawing capital from these private individuals to fund government projects. This is a fiscal stimulus actively encouraged by the government.