BEIJING (Reuters) – China’s banks likely extended fewer new loans in August than the previous month, but the pace was still well above last year’s levels as the central bank looks to support the economy amid rising U.S. trade tensions, a Reuters poll showed.

Money supply growth likely hovered near multi-month highs, while outstanding loans expanded at the same pace as in July.

With U.S. tariffs threatening to heap more pressure on China’s already slowing economy, policymakers have shifted their focus in recent months to improving credit conditions and shoring up business confidence.

The People’s Bank of China has cut banks’ reserve requirements (RRR) three times so far this year to encourage banks to keep lending to struggling firms, and it has injected liquidity in various ways to bring down borrowing costs.

The government is also ramping up spending on big-ticket infrastructure projects to spur domestic demand and lift investment growth from record lows.

China’s banks extended 1.3 trillion yuan (146.9 billion pounds) in net new loans in August, easing from July’s 1.45 trillion yuan but nearly 20 percent more than the same month last year,

according to a Reuters survey of 35 economists.

Policymakers hope these measures will ease some of the strains produced by a multi-year regulatory crackdown on riskier lending and debt, which was pushing up financing costs and fuelling a growing number of defaults.

Broad M2 money supply was seen rising 8.5 percent in August

from a year earlier, matching July’s pace which was the highest in five months, according to the poll.

Annual outstanding yuan loan growth was seen at 13.2 percent in August, the same pace as in July.

Analysts expect Beijing to roll out further growth boosting measures in coming months as the weight of U.S. tariffs mounts. Indeed, more sweeping U.S. measures are expected this month.

Analysts are pencilling in at least one more RRR cut this year. But with bad loans on the rise, the government is having difficulty…

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