China's new yuan-denominated lending in October hit 514 billion yuan (around 80.6 billion U.S. dollars), up 48 billion yuan from a year earlier, official data showed on Thursday.
M2, a broad measure of money supply that covers cash in circulation and all deposits, increased 13.5 percent year on year to 136 trillion yuan at the end of October, the People's Bank of China (PBOC) said in a statement on its website.
The narrow measure of money supply (M1), which covers cash in circulation plus demand deposits, rose 14 percent year on year to 37.6 trillion yuan at the end of last month, the statement said.
However, a significant decrease was seen in loans to home buyers and enterprises, said HSBC analyst Qu Hongbin, who attributed that mainly to sluggish domestic demand and a rising risk aversion mindset among banks.
More easing policies are necessary to protect against the increasing deflation risk, Qu said.
Social financing, funds that non-financial firms and households get from the financial system, increased by 476.7 billion yuan in October, down 177 billion yuan from a year earlier, according to the PBOC statement.
In a bid to further reduce the cost of financing, China's central bank has cut the reserve requirement ratio (RRR) and interest rates five times this year.
The latest move came in late October when RRR for financial institutions was slashed by 0.5 percentage points and benchmark interest rates for one-year loans and deposits were cut by 0.25 percentage points to 4.35 percent and 1.5 percent respectively, to ensure reasonably adequate liquidity in the banking system.
As the economy continues to slow and global financial markets fluctuate, these moves aim to establish a sound financial environment for restructuring and steady growth of the economy, the PBOC said in a separate statement after the interest rate announcement.
It would continue with the fine tuning of monetary policies, and implement various tools to provide adequate liquidity and ensure market stability, the PBOC said.
China's economy expanded 6.9 percent in the third quarter of 2015, the first time the quarterly growth rate has dropped below 7 percent since the second quarter of 2009.
The consumer price index (CPI), the main gauge of inflation, grew 1.3 percent year on year in October, slowed from the 1.6-percent gain in September and 2 percent in August. On a monthly basis, consumer prices edged down 0.3 percent.
Meanwhile, China's producer price index (PPI), which measures wholesale inflation, plunged 5.9 percent year on year last month, marking the 44th straight month of decline and pointing to continuing weak market demand.
