The drop in social financing in July was partially due to seasonal factors, and it also reflected the ongoing local debt swap program and a reduction in nonperforming loans, China's central bank said on Monday.
Broad money supply (M2) grew 10.2 percent year-on-year, compared with June's 11.8 percent gain.
However, volatility in the year-earlier period "distorted" this year's number, the People's Bank of China (PBOC) said in a post on its website. M2 growth will regain momentum in the coming months, it said.
The post was intended to provide an interpretation of the latest data, which some have said missed forecasts.
China's total social financing in July was 487.9 billion yuan, down 263.2 billion yuan from a year earlier, the PBC released the data on Friday.
Analysts had expected July's M2 growth to be 11.2 percent.
The PBC also emphasized in the post that due to various factors, it is normal to see fluctuations in the total social financing numbers, and the bank urged that market observers should not "overreact to short-term results."
Also, base money, or M1, grew 25.4 percent in July, which was the highest since June 2010. That was partially because of surging transactions in real estate, the PBC noted.
Low interest rates for short- and long-term current accounts have kept many enterprises from putting money in the bank, the PBC noted.
