NEW bank lending in China is expected to have risen slightly in August, a recent poll showed, but outstanding loan growth likely trended lower, raising pressure on policymakers to keep liquidity ample as companies ride out the trade tensions.

Chinese banks likely extended 1.2 trillion yuan (US$168.4 billion) in net new yuan loans last month, up from 1.06 trillion yuan in July but slightly below the tally of 1.28 trillion yuan in the same month last year, according to a median estimate in a survey of 27 economists.

Broad M2 supply was seen unchanged last month from 8.1 percent growth in July. Annual growth of outstanding loans in August was seen edging down to 12.4 percent from July’s 12.6 percent.

Some analysts say the annual comparison is a better way to assess trends in China’s credit growth, rather than more volatile monthly readings.

August mortgage loans were widely expected to have stayed soft as the Central Government tightened scrutiny on banks and provincial governments in a bid to contain rapidly-growing household debt and home prices.

The central bank said the latest cut in banks’ RRR will releases 900 billion yuan in liquidity to shore up the flagging economy.

But analysts caution that the large injection may still fall short of helping the real economy.

Analysts expect total social financing, a broad measure of credit and liquidity in the economy, to rise to 1.55 trillion yuan in August from 1.01 trillion in July.

Net issuance of local government bonds are estimated to fall as the provincial authorities are already close to exhausting their annual bond quotas.(SD-Agencies)