Everyone's Losing Sight Of One Of The Most Crucial Numbers In China

Over the past year the world of finance has had its eye fixed on Chinese GDP, watching its slide and the Communist Party's commitment to it.

The party is calling this slow down a "new normal," and what the party says goes.

Here's the thing though: While attention has been fixed on the slow down it seems the world has taken its eye off one of the most important figures in China - total social financing (TSF). After slowing all through 2014 it made a comeback in December.

TSF is a measure that the Chinese government invented in 2011 to figure out how much debt non-state entities (like people and private companies) have taken on. Jim Chanos, founder of Kynikos Associates and on of the biggest China bears out there told Business Insider TSF is "still the most under-appreciated number in global finance."

Why is it so important? Because it gives you a picture of the condition of both borrowers and lenders, and includes things like China's infamous shadow banking sector, where interest rates can hit 20%.

But again, it seems investors are forgetting all that. At least they did at a recent Deutsche Bank China conference.

"Shadow banking' appeared infrequently in commentators' lists of concerns and we found most investors satisfied that, for now at least, the risks are contained. Net flows in the 'shadowy' parts of total social financing - entrusted loans, trust loans and bankers' acceptances - have been much weaker over the past year and the stock of such credits is now growing more slowly than bank loans."

That would be totally fine, except for the fact that in December that trend reversed itself. TSF surged 15.8%, beating at least Bank of America's forecast of 15.3%. Meanwhile new loans fell.

What that tells us is that while the government maintained its commitment to doing little to nothing about the slow down - i.e. not forcing banks to lend out more money - other sectors ramped it up.

That's leading analysts to conclude that China's citizens are finding other (potentially more expensive and risky) ways to get their money, and the government is looking the other way.

Not only did TSF increase in December, but flows into those 'shadowy' parts of TSF Deutsche Bank was writing about increased substantially too (check that out in the chart).

On Friday Beijing showed signs of being concerned about financing for small businesses. High level party officials pledged to offer fresh loans to these businesses as foreign direct investment slowed to 1.7% - its lowest rate in two years - and outbound investment surged 14.1%.

However, who knows whether or not any measures they take will be real or cosmetic. The People's Bank of China has been known to announce interest rate cuts that aren't really cuts because they're optional for banks, for example.

So keep your eyes open to everything everywhere.