China's new yuan loans declined to 900 billion yuan ($129.52 billion) in February, down from a historical record of 3.34 trillion yuan in January, the People's Bank of China, the central bank, reported on Wednesday.

The M2, a broad measure of money supply that covers cash in circulation and all deposits, rose 8.8 percent year-on-year to 203.08 trillion yuan at the end of February, compared with 8.4 percent growth by January, the PBOC said.

The growth of aggregate financing, a broader calculation of the funding provided to the real economy, including local government bonds, slowed to 855.4 billion yuan in February, sharply down from 5.07 trillion yuan in January, indicated contracted financing demand in the non-financial sectors, according to the official data.

Zhang Bin, a member of the China Finance 40 Forum and a senior researcher at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, said weak demand amid the novel coronavirus outbreak has constrained credit growth, and policies should focus on accelerating production resumption while preventing a sharp credit crunch in the following months.