Chinese money growth slowed to its lowest in more than a decade last month, keeping the pressure on the government to loosen monetary policy and prevent the economy from slowing too sharply.

Beijing has already switched to easing mode, as marked by its cut of banks’ reserve requirements two weeks ago, but the latest data showed downside risks were still proliferating.

The broad M2 measure of money supply rose 12.7 per cent from a year earlier, the slowest since May 2001 and well below the 16 per cent rate that the central bank believes is necessary to support economic growth.

“Money creation remains quite sluggish,” said Citi economist Shuang Ding. “We expect more reserve requirement cuts before the Chinese New Year [at the end of January].”

Policy is the main uncertainty hanging over the Chinese economy, with some analysts warning that the government is moving too tentatively to counter the dangers of a sharp slowdown. Beijing has been undeniably cautious in its shift towards easing, preferring to describe its moves as “fine-tuning” rather than a change in stance.

That caution was on display again at the central economic work conference, where the nation’s top leaders laid out a blueprint for economic policies for the coming year. At the end of the conference yesterday, the government gave the maintenance of “stable, fast growth” top spot in its list of objectives. But it also highlighted the importance of managing inflationary expectations, a signal that it will desist from the same magnitude of credit-fuelled stimulus that it unleashed in late 2008 at the onset of the global financial crisis.

While wary of over-stimulating the economy, analysts say the government could quietly water down some of its regulatory constraints on banks to make it easier for them to support cash-starved companies.

The data published yesterday by the central bank revealed that bank deposits grew considerably more slowly than loans last month. With many smaller banks now flirting with the regulatory maximum of a 75 per cent loan-to-deposit ratio, the struggle to attract deposits will dent their ability to extend loans – unless the China Banking Regulatory Commission (CBRC) cuts offenders some slack.

“We expect the CBRC to be more flexible in implementing macro-prudential measures in 2012 so as to ensure sufficient credit expansion,” said Barclays Capital analyst Jian Chang.