China’s credit expanded less than expected in July despite the central government’s monetary easing, during what’s traditionally a weak month for financing activities.

The People’s Bank of China cut a string of interest rates in July in an attempt to boost confidence and demand. Central and local governments are also set to accelerate bond sales in the coming months, which will help push up the flow of broader credit to the economy.

Restrained credit growth is typical in the month of July, a period when banks aren’t in a rush to meet their quarterly lending targets. The same month last year provided a low base of comparison, as new loans plunged to a 14-year low due to weak borrowing appetite.

Beyond seasonal fluctuations, China’s borrowing has kept slowing over the past year as households stopped taking on more mortgages while a prolonged housing downturn takes a toll on incomes.

After years of rapid debt build-up, authorities are finding it difficult to engineer the kind of credit booms that once propelled China out of its downturns. That’s no longer the policy goal, however, as Beijing shifts the economy toward high-tech manufacturing and away from property and infrastructure-driven growth.

Even so, falling prices across the economy mean that despite the slowdown, credit is still growing faster than nominal gross domestic product, reflecting continued financial support to the economy.

  - Bloomberg