China has reported a sharp reduction in its lending last month, after concerns were raised about high credit surge in the first quarter of the year. The country's broadest measure of new credit showed less than expected numbers, suggesting that the central bank may have tempered borrowing requests.

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According to People's Bank of China, aggregate financing for the month of April stood at 751 billion yuan ($115 billion). New Yuan loans were also below expectations at 555.6 billion yuan. The country is looking to stem the growth of a debt-fueled economy. It is also planning to tackle non-performing debt and other associated issues.

The bank reported a 12.8 percent increase in M2 money supply on a year-on-year basis. In the preceding month, the growth stood at 13.4 percent. Additional liquidity was injected into the economy during the second and third quarter of the last year for the purpose of stabilizing the country's volatile stock market.

Foreign currency loans also fell as corporate bond issuance slowed down. The People's Bank of China said it will continue its prudent monetary policy. It also said that it will keep supporting the economy, adding that the slowdown is only temporary.

The bank's website showed that the decrease in growth of new Yuan loans last month was due to a program involving the swap of local government debt for municipal bonds. It is estimated that about 350 billion yuan ($53.6 billion) worth of swaps was traded in the month of April.

Tagschina, Monetary Policy, Credit Expansion