New loans issued by Chinese banks fell sharply in May from the previous month, the central bank said Monday, in a sign Beijing's efforts to stem a flood of credit in the economy are bearing fruit.
The country's banks handed out 551.6 billion yuan ($85.14 billion) in loans in May compared with 739.6 billion yuan in April -- and 100.5 billion yuan less than a year earlier, the People's Bank of China said in a statement.
Analysts had expected 650 billion yuan in new loans, Dow Jones Newswires said.
The data, which come a day before inflation data for May amid fears prices are rose faster, suggest Beijing's "credit controls are gaining traction", IHS Global Insight economists Alistair Thornton and Ren Xianfang said in a note.
Policymakers have been pulling on a variety of levers to rein in bank lending on fears soaring property prices and inflation -- which has been hovering above five percent -- could trigger social unrest.
The central bank has hiked interest rates and increased the amount of money banks must keep in reserve numerous times in the past year.
But there have been growing concerns among analysts that authorities may have gone too far in trying to slow the world's second largest economy and the tightening measures could trigger a hard landing.
"Though these readings could ease markets’ inflation expectations, they could also add fear to the credit crunch stories and worsen worries on a hard landing in China," said Lu Ting, China economist at Bank of America-Merrill Lynch.
The broadest measure of money washing around the economy, M2, rose 15.1 percent at the end of May compared with 15.3 percent at the end of April, the central bank said, in another sign of slowing credit.
China is due to release a raft of economic data on Tuesday that is expected to show inflation accelerated to 5.5 percent in May from 5.3 percent in April as a dry spell in some crop-growing regions sends food prices soaring.