China's bank lending declined in August from a six-year high, while aggregate financing improved from July, data from the People's Bank of China showed Friday.
The PBoC also revised the reserve requirement ratio rules for banks, allowing flexibility in the level of money they set aside as reserves with the central bank.
Accordingly, it allowed the RRR to fall by 100 basis points below the required level on a daily basis. Still banks have to meet the reserve requirement ratio on an average basis.
Data showed that banks extended CNY 809.6 billion new loans in August, which was below July's CNY 1.48 trillion lending. It was forecast to fall to CNY 850 billion.
Meanwhile, total social financing, a broad measure of liquidity in the economy, increased to CNY 1.08 trillion from CNY 718.8 billion a month ago. The expected level was CNY 1.02 trillion.
At the same time, M2 money supply climbed 13.3 percent in August from last year, the same rate as seen in July and matched economists' expectations.
The PBoC cut its interest rates five times since last November and reduced the reserve ratio to support lending.
Mark Williams, an economist at Capital Economics, said the report confirm that policy easing has led to a rebound in credit growth.
This turnaround will raise concerns among many that efforts to rein in debt have been shelved, but it is a welcome shift given the depth of current concerns about the weakness of the economy, the economist added.
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