Mubasher: New bank lending in China in August as the authorities stepped up their support to the sluggish economic growth, while further monetary policy relaxation is expected in the coming weeks.

Chinese banks extended 1.21 trillion yuan (CNY) ($170 billion) in new loans last August, compared with CNY 1.06 trillion in July, data by People’s Bank of China (PBoC) showed on Wednesday.

Household loans, mostly mortgages, rose to CNY 653.8 billion last month, up from CNY 511.2 billion in the prior month, while corporate loans climbed to CNY 651.3 billion, up from CNY 297.4 billion.

Chinese policymakers have been pushing to ramp up lending and reduce financing costs for more than one year, most specifically for smaller and private businesses, which make up a major proportion of the nation’s economic expansion and job creation.

Meanwhile, outstanding yuan loans grew by 12.4% year-on-year in August, slowing down from 12.6% in July.

The growth pace of broad M2 money supply came in at 8.2% on an annualised basis, a little faster than 8.1% in the previous month.

That said, credit demand has not accelerated as much as anticipated, possibly because of faltering domestic orders, and the Sino-US trade feud, analysts told Reuters.

This also fuelled expectations that the PBoC would undertake further stimulus measures to reinvigorate investment and stabilise economic activity.

“In the next step, monetary policy is expected to be preemptive and flexible, there is room for cutting interest rates and reserve requirements,” Beijing-based Minsheng Bank economist Wen Bin was quoted by the news agency.

By 2:54 pm GMT, the USD/CNY pair inched down by 0.06% to CNY 7.1168.