New loans issued by China's banks fell nearly 10 per cent in the first half of 2011, the central bank said Tuesday, suggesting Beijing's efforts to stem a flood of liquidity are bearing fruit.

Chinese banks handed out 4.17 trillion yuan ($644 billion) from January to the end of June -- down 449.7 billion yuan, or 9.7 per cent, from the same period last year, in a statement.

In June, banks issued 633.9 billion yuan in new loans, more than the 551.6 billion yuan in May but less than the 739.6 billion yuan in April, according to central bank data.

Last month's new loans were also 20.7 billion yuan more than a year ago, the statement said.

Policymakers have been pulling on a variety of levers to rein in bank lending on fears soaring property prices and inflation -- which hit a three year high of 6.4 per cent in June -- could trigger social unrest.

The central bank has increased interest rates five times since October and increased the amount of money banks must keep in reserve numerous times in the past year.

The latest data show a lending spree at Chinese banks aimed at beating the global downturn "has been brought under full control" by the tightening measures, Li Huiyong, a Shanghai-based analyst with Shenyin Wanguo Securities, told AFP.

The central bank also said the country's foreign exchange reserves -- already the world's largest -- soared 30.3 per cent from a year ago to a record $3.1975 trillion at the end of June.

Premier Wen Jiabao at the weekend renewed a vow to keep curbing inflation as Beijing's top priority, adding stabilising pork costs -- a main driver of consumer price rises -- was an "overwhelming responsibility" of the government.

channelnewsasia.com