Researchers and financial practitioners said data released recently by China’s central bank and regulators show a solid basis for stabilized financial market operations and firm financial support for the real economy, the part of the economy that produces goods and services.

Li Peijia, a senior analyst with the Institute of International Finance at Bank of China Ltd, said: “China launched a series of policies to promote supply-side reform and prevent financial risks. These policies played a key role in containing the rapid growth of China’s overall leverage ratio and in further reducing excessive interbank leveraging-up activities.”

She said the growth of total social financing slowed down relatively fast this year, as banks adjusted their entrusted loan and trust loan businesses amid tighter regulation.

According to the People’s Bank of China, the nation’s central bank, total social financing increased by 7.9 trillion yuan ($1.2 trillion) year-on-year during the first five months of 2018. The growth was 1.44 trillion yuan less than that of the previous year, as the effect of regulatory strengthening and deleveraging policies has appeared gradually.

An official of the China Banking and Insurance Regulatory Commission said the banking and insurance sectors are joining the effort to eliminate ineffective supply and foster new drivers for growth to improve the quality and benefits of serving the real economy.

As of the end of May, loans provided by banking institutions in Chinese yuan and foreign currency increased by 12 percent year-on-year to 133 trillion yuan. The growth of lending to small and micro enterprises was at a faster pace of 14.2 percent, according to the commission.

Regulators continue to focus and make progress on de-risking the financial sector with coordinated measures, said Moody’s in a recent report.

“The result is reflected in our adjusted total social financing series, growth of which is now more aligned with nominal GDP growth－a sign that the buildup of economy-wide leverage has been further contained,” said Michael Taylor, a Moody’s managing director and chief credit officer for Asia-Pacific.

Measures to support system liquidity and financial stability have limited disruptions from de-risking campaign. Liquidity conditions remained tight after the 100 basis point cuts in required reserve ratio in late April by the People’s Bank of China. However, the RRR cut will improve liquidity conditions of small and midsize banks that have limited access to medium-term lending facilities, Moody’s said.

Authorities have also extended a grace period to implement the long-awaited asset management rules. All reflect a pragmatic approach to avoid disruptive impact on economic growth and financial stability from the broader push to deleverage, the report said.

Liquidity for commercial banks remain moderately adequate, with liquidity coverage ratio standing at 125 percent as of the end of May, according to China’s banking and insurance regulator.