New bank lending in China rose by far less than expected in November, highlighting weak credit demand in the world's second-largest economy as policymakers pledge to roll out more stimulus measures.

Chinese banks extended 580 billion yuan ($79.72 billion) in new yuan loans in November, up from October but missing analysts' forecast as the central bank steps up support for the economy.

Analysts polled by Reuters had predicted new yuan loans would rise to 990 billion yuan last month, from 500 billion yuan in October and against 1.09 trillion yuan a year earlier.

"With policymakers planning a larger budget deficit next year, strong government bond issuance will continue to prop up credit growth over the coming quarters," Capital Economics said in a note. "But we don't envisage much of a pick-up in private sector credit demand."

The People's Bank of China (PBOC) does not provide monthly breakdowns, but Reuters calculated the November figures based on the bank's Jan-Nov data on Friday, compared with the Jan-Oct figure. The PBOC said new yuan loans totalled 17.1 trillion yuan for the first 11 months of the year, versus 21.58 trillion yuan a year earlier.

Household loans, including mortgages, rose to 270 billion yuan in November from 160 billion yuan in October, while corporate loans rose to 250 billion yuan from 130 billion yuan, according to Reuters calculations based on central bank data. China's leaders, at the annual agenda-setting Central Economic Work Conference that concluded on Thursday, pledged to increase the budget deficit and cut interest rates and banks' reserve ratios to counter the impact of expected U.S. trade tariffs on next year's economic growth. Earlier this week, the Politburo promised to switch to an "appropriately loose" monetary policy stance. Reuters reported last month that government advisers recommended that Beijing keep its growth target of around 5% unchanged next year.

China's economy has struggled this year, prompting policymakers to act in September, with the central bank unveiling its most aggressive monetary easing since the pandemic, cutting interest rates and injecting 1 trillion yuan into the financial system, among other steps. The government launched a $1.4 trillion debt package last month to ease local government balance sheets and unveiled tax incentives on home and land transactions to spur demand and ease the financial burden on developers.

DIFFICULT TASK

China may just be able to reach its growth target of around 5% this year, but maintaining that pace next year would be a difficult task as higher U.S. tariffs loom.

Analysts at UBS expect the PBOC to cut its key policy rate by 30-40 basis points in 2025 and another 20-30bp in 2026, which could help lead to more cuts in loan prime rate - the benchmark lending rate - and mortgage rates.

Broad M2 money supply grew 7.1% in November from a year earlier, central bank data showed, below analysts' 7.5% forecast in the Reuters poll. In October, M2 grew 7.5%.

The narrower M1 money supply fell 3.7% in November from a year earlier, moderating from a 6.1% drop in October.

Outstanding yuan loans grew 7.7% in November from a year earlier. Analysts had expected 7.9% growth, slower than the 8.0% recorded in October.

The outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, grew 7.8% in November, unchanged from October - a record low. Acceleration in government bond issuance could help boost growth in TSF.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies, and bond sales.

In November, TSF rose to 2.34 trillion yuan from 1.4 trillion yuan in October. Analysts polled by Reuters had expected TSF of 2.8 trillion yuan.

($1 = 7.2754 Chinese yuan renminbi)

(Reporting by Kevin Yao and Liz Lee; Editing by Chizu Nomiyama Editing by Sam Holmes, Alexander Smith and Frances Kerry)