Faster credit supply boosts Q3 growth prospects

However, there are worries that the economy may head in the opposite direction, as the country's social financing, a measure of funds raised by entities in the real economy, declined to 808.8 billion yuan in July, the lowest level in 21 months, which means weak growth strength in the real economy.

Analysts believed that the easing expectation on the yuan's appreciation and tighter supervision over financing after the cash shortage crisis has caused the drop.

The government has issued a raft of measures such as lifting caps on banks' lending rates and requiring more transparency in transactions in bond markets in an effort to channel reform in the country's financial sector.

But given the 14.5 percent growth in M2, which is higher than the government-set expansion target of 13 percent for the year, Guan said room for further relaxation in the country's monetary policy is limited, while more tightening is also unlikely.

"Authorities will maintain a prudent monetary policy and refrain from using the monetary tools of interest rates and banks' reserve ratio in the second half of the year. With forex funds remaining depressed, reverse repurchases of central bank bills will be a main method to inject

A statement released Sunday after a meeting of bank heads under the country's central bank said that major economic indicators were within reasonable range, adding that the country's economic restructuring and transformation has made progress.