A flurry of economic data on Wednesday showed China's recovery remains patchy despite several rounds of targeted easing by the government in recent months, triggering talk that more support measures may be in the pipeline.
Retail sales for July was a slight miss, rising 12.2 percent from the year before, versus a Reuters estimate for a 12.4 percent increase and following June's 12.4 percent rise.
Industrial output for the month was in line with forecasts, up an annualized 9 percent after climbing 9.2 percent in June.
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But the weakest reading came the total social financing (TSF) aggregate, a broad measure of liquidity in the economy which includes new bank loans, which showed the amount of money flowing into China's economy slowing to the lowest level in nearly six years in July.
The TSF fell to 273.1 billion yuan ($44.34 billion) in the month, about one seventh of that in June and the lowest monthly reading since October 2008 in the depths of the global financial crisis.
Data from the central bank also showed Chinese banks made 385.2 billion yuan ($62.53 billion) worth of new yuan loans in July, down sharply from 1.08 trillion yuan in June and well below expectations of 727.5 billion yuan.
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Immediately following the data release, the People's Bank of China took the unusual step of issuing a statement, reassuring markets that credit and financing growth was still reasonable and that it had not changed its monetary policy.
"The big news was the collapse in the July financing data. The level of total social financing fell below that of new yuan loans (this has only happened three times since 2009), which is testament to the shadow banks that have cut back on activity and failed to roll over maturing loans," Chris Weston wrote in a note.
"Ultimately most will view this decline in credit that the financial system is undergoing rapid deleveraging and if the tightening continues would be very bearish for future growth," he added.
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A burst of stimulus provided by the government in recent months has supported the world's second biggest economy, which grew 7.5 percent in the second quarter after slowing to 7.4 percent the first quarter, its slowest pace since third quarter of 2012.
"Overall, the data confirms our view that China's growth recovery remains fragile and is largely policy-led and not self-sustaining as domestic demand remains soft," said Jian Chang, analyst with Barclays. "As a result, we think more policy easing is unavoidable if the government wants to achieve the 7.5 percent growth target."
"Despite the PBoC's preference for targeted easing, through rediscounts, relending and PSL, we have argued that broad-based interest rate cuts would be a better policy. To reflect this view, we maintain our forecast of two rate cuts in H2," he added.