The report said macro easing will pick up momentum as the world’s second largest economy is going through a widely expected slowdown and inflation is under control

The average monthly new loans in Q3 are expected to hit a record high of 650billion yuan on higher demands lifted up by encouraging policies in the first half of 2012, according to a latest Bank of China report.

The report also estimated new lending at 8.2trillion yuan and total social financing at 14.5trillion yuan for the whole year.

China’s new lending grew to a higher-than-expected 793.2billion yuan($125billion) in May, a 241.6billion-yuan rise compared with last year, propped up by the government’s policies to maintain steady economic growth.

Meanwhile the report said macro easing will pick up momentum as the world’s second largest economy is going through a widely expected slowdown and inflation is under control.

CPI growth is expected to continue the falling streak to about 2%, according to the report, which added that falling commodity prices and easing inflation pressure are creating more space for a fine-tuning in monetary policies.

However, another “4-trillion” stimulus package is not likely, said Huang Wentao, chief macro-economic analyst with China Securities Co.

The country’s public debt as a percentage of GDP has surpassed a safe minimum of 60% to reach 68% by the end of 2011 and China’s debt ratio is likely to hit as high as 85%, factoring in
invisible debts including pension shortfall and bad loans in commercial banks, Huang explained, “there’s little room for fiscal policies.”

He estimated GDP growth would go up at a steady pace to 7.9% in the fourth quarter after bottoming out in the second quarter at 7.8%.

A sharp drop in Q2 is “inevitable” as domestic demands remain weak and international environment remains uncertain, he said.

China’s economic growth slowed more than expected to 8.1% in the first quarter from the same period a year earlier, compared with an 8.9% increase in the country’s gross domestic product in the fourth quarter of 2011, and also lower than the 8.5% expansion expected by economists surveyed by FactSet Research.