(Yicai Global) Nov. 11 -- China's newly added yuan loans are expected to have decreased drastically last month due to seasonal factors, according to surveyed chief economists.

The tally of new loans is likely to have shrunk by more than one-half to CNY830.4 billion (USD118.7 billion) from September, and the scale of total social financing should also be smaller, according to the monthly Yicai Chief Economist Survey.

Although the People's Bank of China has gradually cut reserve requirement ratios and the loan prime rate also dipped last month, new loans are probably down from September because of the long holidays in October, said Lian Ping from Bank of Communications. China celebrated its National Day with a one-week holiday in early October. 

The chief economists forecasted total social financing, a broad measure of credit and liquidity in the economy, to have declined by more than one-half to CNY1 trillion (USD142.8 billion) from a month earlier. 

Credit, special bonds, and trust loans are the main factors resulting in the reduced scale of social financing last month, said Hua Changchun from Guotai Junan Securities. The issuance of trust loans was cut by nearly one-half last month, and is expected to fall even further. Moreover, many local governments issued special bonds in September.

Meanwhile, the financial chiefs predicted broad money to expand faster. The rate of M2 growth should climb to 8.5 percent in October from 8.4 percent in September, they estimated. The hike could also be partly explained by balancing after last year's drop in M2.  

As commercial housing sales stabilize and grow, residents' deposits are converted to corporate current deposits, which may have boosted M1 by 3.9 percent in October, said Lu Zhengwei from Fuzhou-headquartered Industrial Bank.

Editor: Emmi Laine