BANKS in China likely extended fewer new loans in August than the previous month, but the pace was still well above last year’s levels as the central bank looks to support the economy amid rising U.S. trade tensions, a recent poll showed.

Money supply growth likely hovered near multi-month highs, while outstanding loans expanded at the same pace as in July.

With U.S. tariffs threatening to heap more pressure on China’s economy, policymakers have shifted their focus in recent months to improving credit conditions and shoring up business confidence.

The People’s Bank of China has cut banks’ reserve requirements (RRR) three times so far this year to encourage banks to keep lending to struggling firms, and it has injected liquidity in various ways to bring down borrowing costs.

China’s banks extended 1.3 trillion yuan (US$190.04 billion) in net new loans in August, easing from July’s 1.45 trillion yuan but nearly 20 percent more than the same month last year, according to a survey of 35 economists.

Broad M2 money supply was seen rising 8.5 percent in August from a year earlier, matching July’s pace which was the highest in five months, according to the poll. Annual outstanding yuan loan growth was seen at 13.2 percent in August, the same pace as in July.

Analysts expect China to roll out further growth boosting measures in coming months.

Analysts are penciling in at least one more RRR cut this year. The Finance Ministry dangled yet another incentive to banks last week, saying they will get a tax break on income from loans to smaller firms.

Total new bank loans in the first seven months of the year jumped 19 percent from a year earlier to 10.48 trillion yuan. That is well on track to set a new full-year record, eclipsing last year’s 13.53 trillion yuan.

(SD-Agencies)