Zhu said that shifting the focus from credit growth to credit composition is an important feature of the new monetary policy operational framework.

"This implies that, despite the slowdown in headline TSF growth, the impact on economic activity could be much smaller," Zhu said.

Regarding monetary policy, he forecast that policy rates will stay unchanged and credit growth will remain stable in the coming months because the PBOC is reluctant to implement traditional monetary easing measures such as policy rate cuts or reserve requirement ratio cuts.

He said the central bank is concerned about "distortions" in the monetary policy transmission mechanism.

Wen Bin, principal researcher at China Minsheng Banking Corp Ltd, said the September figures showed that credit growth was normalizing compared with the previous two months, and the relatively large amount of medium-and long-term loans imply rising corporate demand for funds for investment.

"The government has sent a clear signal that the economy will not suffer a hard landing. As long as China can create 10 million more urban jobs to ensure the registered urban unemployment rate does not rise above 4.6 percent, the central bank is unlikely to cut reserve requirement ratios and interest rates on a wide scale, even if economic growth falls below 7.5 percent," Wen said.

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