Data released on Wednesday showed that Chinese banks extended 985.5 billion yuan ($149.56 billion) in new yuan loans in May, exceeding analysts' expectations and well above the previous month's levels. Economists polled by Reuters had expected new loans would climb to 750 billion yuan last month, from a six-month low of 556 billion yuan in April.

Broad M2 money supply (M2) grew 11.8 percent from a year earlier, down from April's 12.8 percent. Analysts had expected May growth of 12.5 percent. The PBOC is aiming for annual M2 growth of around 13 percent this year, and with M2 growth running well below its 13 percent target, Chinese authorities are likely to add more easing measures in the foreseeable future.

"As growth momentum continues to slow, and inflation remains soft, we think that further monetary easing will inevitably follow. We hold on to our view that the PBoC will either cut the RRR by 50 basis points or cut the policy rates by 25 basis points this month," said Commerzbank in a report.

Risks related to China’s financial system have risen in the last year, as credit growth has accelerated from an already high pace. The IMF this week said China’s near-term economic outlook is being buoyed by policy support even as its medium-term prospects become more uncertain because of rapidly rising credit. Growth in GDP has slowed, implying that the credit efficiency has declined further. Of course, monetary easing will worsen the high leverage of the economy in the medium to long term; but, it is clear that the authorities treat growth as the top priority.

"No sign at all of credit being reined in," said Michael Every, head of financial markets research at Rabobank Group in Hong Kong. "Naturally it’s very short-term positive, much more worrying longer term."