The Chinese credit market is weaker than expected with deposits seeing a huge decline in the first week of June, China Finance Net reported.

The loans of the Big Four banks increased only 6.6 billion yuan ($1.04 billion) and their deposits plunged 272 billion yuan in the first week of June.

The Big Four banks are the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China.

"The credit demand of many small and medium-sized enterprises declined, due to reduced orders and declining exports. Urgent credit requesters, such as local governments, which are controlled by related regulations, cannot get loans. They both contributed to the slowdown of new loan growth, " the report cited a loan department manager as saying.

It's also difficult for banks to provide enough credit, due the high deposit reserve ratio requirements, the manager said.

Chinese local governments and banks now rely excessively on the land and property industry, Yu Bin, Minister of Macroeconomic Research Department at the Development Research Center of the State Council, was quoted as saying.

"If house prices drop substantially, banks and local governments will face huge financial pressures," Yu said.

The issue of 800 billion yuan of new loans by Chinese banks in May, more than the expected 750 billion yuan, surprised the market. Most mortgages were launched in the final three days of the month, according to the report.