Why headline TSF is 'of little meaning' to calculate China's credit growth

It's a 'second derivative' of credit.

According to Bank of America Merrill Lynch, while others may simply calculate credit growth in China based on a year-on-year change in headline TSF, this calculation is of little meaning as the headline TSF is a net increase of system-wide credit and a year-on-year change of headline TSF is more like the rate of change of credit (or “second derivative” of credit).

"We believe the proper method is to calculate year-on-year growth of outstanding TSF which was around 21.5% in 1Q13, or about 12ppt above current nominal GDP growth rate."