According to data released by the People's Bank of China, the central bank, on Wednesday, AFRE, which consists of bank loans, bonds, stocks and other forms of financing in the market, rose by 31.35 trillion yuan ($4.93 trillion) in 2021. Up to 63.6 percent of the financing was bank loans rendered to the real economy, up 6 percentage points year-on-year.

The rise shows that the financial sector is addressing more needs of the real economy, explained Wen Bin, chief researcher at China Minsheng Bank.

For the second month in a row, AFRE rose in December, this time by 720.6 billion yuan to 2.37 trillion yuan, showing the indicator has started to stabilize, said Wang Yunjin, senior researcher at Zhixin Investment.

Gao Ruidong, chief economist for Everbright Securities, said direct financing like government bonds, corporate bonds and stocks in general, and larger-than-usual local government debt in particular, helped increase AFRE in December.

Tang Jianwei, chief researcher of the Bank of Communications Research Center, said the stock proceeds of onshore non-financial companies amounted to 211.8 billion yuan in December, reporting a record in terms of monthly reading and reflecting the buoyant sentiment for stock market financing.

While the benchmark Shanghai Composite Index slid 1.17 percent on Thursday, total trading value on the Shanghai and Shenzhen bourses exceeded 1.09 trillion yuan.

Meng Lei, A-share strategist of UBS Securities, said stock investments will account for 21 percent of total Chinese household assets in the next five years, up from 17 percent at present.

Latest PBOC data showed China's renminbi loans increased to 19.95 trillion yuan in 2021, a record, exceeding the 2020 level by 315 billion yuan. But the increase in renminbi loans in December was 1.13 trillion yuan, which was 123.4 billion yuan less than the figure in the same period of 2020.

Liang Si, a researcher with Bank of China, said the increase in companies' mid- to long-term loans started to contract in July last year, which can be attributed to the resurgence of COVID-19 in some parts of the country and the rising prices of commodities. Companies' regular production and operations were disrupted, thus impairing their credit demand.

But the negative impact of the slowdown on the rise in bank loans has been offset by the rise in AFRE, said Zhou Maohua, a macroeconomic researcher with China Everbright Bank.

Banks will increase their credit in January and the size of bank loans is expected to pick up quickly, said Wen of Minsheng. To support the development of small and medium-sized enterprises, technological innovation and rural revitalization will receive priority in future monetary and fiscal policies, he said.

Wang Qing, chief macroeconomic analyst of Golden Credit Rating, said the credit environment will be further improved this month as more stabilizing macroeconomic policies have been introduced and financing regulations for property developers have been relaxed.

The rise in AFRE will also accelerate in the first quarter as local governments' special bonds will be released in advance, he said.