The central bank will continue to implement prudent monetary policy and to ensure credit grows at a proper pace, after data released on April 14 showed improvement of the credit structure.

“A smooth declining trend of money supply reflects the central bank’s intention to maintain a prudent monetary policy and to strengthen supervision to financial institutions, especially to banks’ highly leveraged activities,” said Ruan Jianhong, head of the Statistics and Analysis Department at the People’s Bank of China.

Ruan said the central bank will continue its prudent monetary policy, creating an ideal financial environment for implementing supply-side reform and restructuring.

She made the comment after data on April 14 showed that M2, the broadest measure of money supply, has declined for three consecutive months.

M2 grew by only 10.6 percent year-on-year in the first quarter, compared with 13.4 percent growth in 2016, after having grown by 11.1 percent in February and 11.3 percent in January.

M2 money supply in March registered its slowest year-on-year growth since July.

Ruan said slower growth in new yuan loans to the property market is a significant factor in the slower money supply growth.

New housing loans issued in the first quarter of this year reached 1.7 trillion yuan ($247 billion), accounting for 40.4 percent of total new yuan loans in that period, 4.5 percentage points lower than in the previous quarter, according to the central bank.

Yan Yuejin, a senior researcher at E-House China R&D Institute, expected the central bank to tighten credit in first- and second-tier cities to prevent price surges.

Money pumped into the real economy, or to sectors producing goods and services, reached 4.58 trillion yuan, up by 145.7 billion yuan year-on-year.

Medium-to-long outstanding loans issued to enterprises in manufacturing grew by 2, in infrastructural construction by 2.1 and service sectors by 2.1 percentage points compared with the previous quarter.

“A demand surge for loans to enterprises in the first quarter means that enterprises have brighter economic prospects than last year,” said Kang Yi, vice-president of Agricultural Bank of China.

Kang said the trend is in line with signs the economy is ticking up, referring to rapid growth of industrial profits in the first two months.