(Yicai Global) Aug. 16 -- The broad measure of money supply, known as M2, grew at a record low pace of 9.2 percent in July, while new yuan loans and social financing increased at a faster than expected rate. Experts said this indicates financing demand in the real economy kept rising quickly and banks' support for the real economy remained strong after financial deleveraging.

M2 rose 9.2 percent annually to CNY162.9 trillion (USD24.3 trillion) as of end-July, compared with an expected increase of 9.5 percent and a gain of 9.4 percent a month ago, according to credit data about last month published by the People's Bank of China yesterday. The central bank said earlier that M2 growth of less than 10 percent will become the norm in the future.

The continued decline in M2 growth was mainly due to regulatory tightening of late aimed at regulating off-balance-sheet activities and reining in growth in interbank businesses, placing downward pressure on M2 growth, Lian Ping, chief economist at Bank of Communications Co. [SHA:601328], told Yicai Global.

New yuan loans were CNY825.5 billion in July, up CNY361.9 billion from a year ago, while new social financing was CNY1.22 trillion, up CNY741.5 billion year-on-year. Both figures beat market expectations. The bigger increase in new social financing suggested that financing demand kept growing rapidly in the real economy, Lian said.

While M2 growth hit a historic low, there is no need to worry as financial deleveraging has taken effect and banks' support for the real economy has strengthened, said Wen Bin, chief researcher at China Minsheng Banking Corp. [SHA:600016; HK:1988].