(Bloomberg) -- China’s credit supply expanded at a low pace in November, while weak corporate borrowing and the slow rate of money supply expansion worried economists.

Aggregate financing, the widest measure of credit provided to the economy, rose 9.4% compared to the same month last year, the People’s Bank of China said Wednesday. That continued a streak of single-digit growth recorded this year, compared with the double-digit expansion that was normal in previous years.

The volume of such financing was 2.45 trillion yuan ($341 billion), lower than economists’ median forecast of 2.6 trillion yuan. China’s M1 money supply measure expanded at the slowest pace in nearly two years.

Government bond issuance was the biggest component in monthly credit growth. Loan growth disappointed, with financial institutions offering 1.09 trillion yuan of new loans in the month, versus a projected 1.3 trillion yuan.

“November credit numbers looks disappointing,” said Xing Zhaopeng, senior China strategist at Australia & New Zealand Banking Group Ltd. “Bank loan growth and M1 growth both hit multiple-year lows, reflecting the slowing growth momentum.”

Xing said that “the overall picture remains that public financing accelerated while private financing decelerated,” and added that the data raise the likelihood of a near-term cut to bank reserve requirements. China will release wider data on November’s economic activity later this week.

Growth of long- and medium-term loans to households, seen as a proxy for mortgages, picked up slightly in November from the previous month, as Beijing unveiled more measures to boost the property market. But the volume of such loans remained far lower than in previous years.

Corporate long- and medium-term borrowing growth slowed, reflecting weak corporate confidence.

M1, which measures currency in circulation and some deposits, expanded 1.3%, the slowest pace since January 2022. Broad M2 money supply, reflecting a wider range of deposits, grew 10% from a year earlier. 

The widening gap between the expansion pace of the two measures has drawn the attention of economists and authorities in recent months. Members of China’s top lawmaking body said in October that it suggests money is idling between banks or between lenders and large enterprises.

“Slowing in both M1 and M2 growth reflects lackluster credit demand outside policy-sensitive sectors like infrastructure and government bond issuance,” said Duncan Wrigley, China economist at Pantheon Macroeconomics.

China has shifted toward fiscal stimulus this year, with the central government and local officials issuing more debt to fund everything from infrastructure to disaster relief work, as the main measure to bolster the economy. 

That has helped keep the flow of credit to the economy steady even as demand from households and companies to borrow for property purchases or investment has weakened.

The years-long collapse in the housing market has undermined credit demand from both developers and households. The PBOC has been reticent to cut interest rates substantially to aid credit demand, and some economists see it as waiting until early 2024 before lowering policy rates. 

However, the bond supply rush moderated on a month-on-month basis in November amid concern over a cash crunch in the interbank market, with a liquidity squeeze at the end of October pushing some smaller financial institutions to borrow short-term cash at a rate of 50%. Government bond issuance fell to 1.2 trillion yuan in November from 1.6 trillion yuan in the previous month, according to PBOC data.

Read more: China’s Credit Growth Still Weak in October With Low Loan Demand

The head of the central bank recently promised to keep the growth of money supply in check while guiding lending to key sectors including technology and advanced manufacturing. The PBOC is also trying to smooth out the credit cycle, encouraging lenders to bring forward some loans from next year to this year and then capping the amount of new loans they issue in early 2024, people familiar with the matter said.

China’s annual economic policy meeting that ended Tuesday said the expansion of credit and money supply should match growth and inflation targets. The language hinted a greater space for cuts to interest rates and banks’ reserved requirements in coming months to counteract the impact of deflation on borrowing costs, economists said.

--With assistance from Fran Wang and Tom Hancock.

(Updates with more details.)

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