China's new yuan-denominated loans continued to rise in May amid the country's enhanced support for channeling funds to the real economy, official data showed Wednesday.

New yuan loans hit 1.48 trillion yuan (about 209 billion U.S. dollars) in May, a year-on-year increase of 298.4 billion yuan, the People's Bank of China (PBOC) said.

The M2, a broad measure of money supply that covers cash in circulation and all deposits, rose by 11.1 percent year on year to 210.02 trillion yuan at the end of May, PBOC data showed.

The growth rate was unchanged from that seen at the end of April, and up 2.6 percentage points compared with the same period last year.

The narrow measure of the money supply (M1), which covers cash in circulation plus demand deposits, stood at 58.11 trillion yuan by the end of May, up 6.8 percent from a year ago.

M0, or the amount of cash in circulation, rose by 9.5 percent year on year to 7.97 trillion yuan by the end of last month.

Zhang Yu, an analyst with Hua Chuang Securities, said that increased issuance of government bonds, along with banks' efforts to channel more lending to the manufacturing industry, contributed to the expansion of new yuan loans last month.

Wednesday's data also showed that China's newly-added social financing, a measurement of funds the real economy receives from the financial system, came in at 3.19 trillion yuan in May, up 1.48 trillion yuan year on year.

In breakdown, yuan-denominated loans to the real economy increased by 1.55 trillion yuan, up 364.7 billion yuan from a year ago, and net financing via corporate bonds saw stellar growth of over 190 billion yuan to reach 297.1 billion yuan, according to the PBOC.

China is working on new monetary policy instruments that can directly stimulate the real economy and stepping up efforts to ensure enterprises can secure loans more easily.

The central bank introduced two new monetary policy instruments earlier this month to directly channel funds into the real economy, another sign that the country's monetary policy will not slide into quantitative easing.

The better-than-expected data was evidence that the financial sector has boosted support for the real economy, said Wen Bin, chief analyst at China Minsheng Bank, estimating credit demands among firms to continue to expand as business activities gradually return to normal.

For the next stage, efforts should be made to step up counter-cyclical adjustments, and promote the issuance and use of special national and local government bonds. Efforts should also go into shoring up the weak links of social and economic recovery and development in a more precise and effective manner, Wen said.

The country will use a variety of tools such as required reserve ratio reductions, interest rate cuts, and re-lending to enable M2 money supply and aggregate financing to grow at notably higher rates than last year, according to this year's government work report. 

Source: Xinhua News Agency