Banks in China extended 700.1 billion yuan (US$103 billion) of yuan-backed loans last month, half of January's 1.39 trillion yuan, the People's Bank of China, the country's central bank, said on its Website yesterday.

New credit in China in February fell on government moves to limit lending growth to avoid overheating, according to the latest monthly economic data.

The Spring Festival, which fell on February 14, was partly responsible for the lower growth in February loans. The week-long holiday occurred in January in 2009.

Banks in China lent 9.6 trillion yuan of new credit in 2009 to cement economic growth amid the global financial crisis.

The growth in M2, the broadest measure of money supply, including cash and deposits, slowed to 25.5 percent from January's 26 percent.

Alaistair Chan, associate economist at Moody's Economy.com said "February monetary data show further tightening as expected."

Chan said "It suggests the government has a better grip on commercial banks now and will guide lending lower as the year progresses."

The wave of credit propelled China's economy to expand 8.7 percent last year. But the growth was accompanied by increasing property prices and rising concerns over redundant investments.

The central bank has already asked banks to keep more money from lending through two reserve requirement increases in a month this year.

The big five state-owned banks, including the Industrial and Commercial Bank of China, now must meet a ratio requirement of 16.5 percent while smaller joint stock banks are required to put aside 14.5 percent of their capital.

Meanwhile, the China Bank Regulatory Commission has raised the requirement of banks' capital adequacy ratio and issued a so-called window guidance to avoid a surge in loans.

China targets a whole year money supply growth of 17 percent and total new credit of 7.5 trillion yuan this year.

Economists are expecting more reserve requirement rises this year as the main weapon to control credit growth. An interest rate hike is also likely as early as mid year.