China Credit Impulse Flashes Warning as Bitcoin Holds Firm

China’s credit impulse, devised by economist Michael Biggs in 2008, tracks changes in the flow of new credit relative to gross domestic product, rather than the stock of outstanding debt. A rising reading typically signals faster financing, spending and growth. Societe Generale research says the gauge correlates with global manufacturing and commodity cycles and can lead S&P 500 returns by about 12 months, making it a closely watched liquidity signal for equities, commodities and bitcoin.

As of Sept. 2, the raw Bloomberg China Credit Impulse index stood at 20.84, its lowest since 2008, according to MacroMicro data. Societe Generale strategist Albert Edwards warned that weaker credit creation relative to GDP could foreshadow a global slowdown, pressuring earnings and U.S. stocks. Bitcoin has remained comparatively resilient: it rallied 25% in August and topped $80,000, supported by inflows into U.S.-listed spot ETFs and short covering, before stalling just below $80,000 amid renewed concern about a Federal Reserve rate increase.