The amount of new loans extended on the mainland last month was lower than expected, indicating the authorities refrained from adding liquidity to spur growth despite a rapidly cooling property market that has flagged further weakness in the economy.
The lingering tightness in liquidity also reflects the regulators' efforts to rein in shadow-banking businesses to prevent systemic risks after several property trusts reportedly defaulted on their products. An approaching peak of property trust repayments is likely to test market stability, analysts say, with more than 120 billion yuan (HK$151 billion) worth of products expected to mature this month.
Remarks by President Xi Jinping during a visit to Henan province on Saturday that people should adapt to the "new normal" of economic development have been widely interpreted by observers as suggesting that Beijing remains comfortable with the pace of slowdown in economic growth.
Echoing Xi's message, People's Bank of China governor Zhou Xiaochuan told a closed-door forum at the weekend the authorities would not easily resort to massive stimulus in response to short-term fluctuations in economic data, but policy fine-tuning would continue.
Aggregate social financing fell by 12 per cent year on year to 1.55 trillion yuan last month, PBOC said on its website yesterday. Trust loans rose 41.7 billion yuan year on year, only a fifth of the increase in April last year.
New yuan loans extended by banks reached 774.7 billion yuan last month, below the 880 billion yuan expected by analysts and also lower than the 1.05 trillion yuan issued in March.
M2, a gauge of money supply, rose 13.2 per cent at the end of April, accelerating from 12.1 per cent growth in March but slower than the 16.1 per cent growth in April last year.
"In the face of calls for stimulus, China's government appears comfortable with a continued slowdown in credit growth," said Mark Williams, chief Asia economist with London-based Capital Economics.
Some analysts have warned that the mainland's gross domestic product growth risks slowing further, after easing to 7.4 per cent in the first quarter from 7.7 per cent in the fourth quarter of last year, if the government does not pump in liquidity in a timely manner to help companies, including property developers.
The real estate market has been cooling fast in the past few months, thanks to curbs on home sales and bank lending implemented by regulators in response to property bubbles. Land sales and home transactions fell in some cities while some developers are near bankruptcy.
China Vanke, the mainland's largest developer by sales, reported a 5 per cent drop in net profit - its first in more than a decade - in the first quarter.
Barclays Capital said the government was likely to tolerate further correction and "bad news" in the property market, but that it could announce more supportive measures including broad-based easing if house-price declines reach about 10 per cent.