BEIJING (Reuters) - China’s new bank loans are expected to fall in July after record lending in the first half of the year, but are still likely to be higher than a year earlier, amid sustained policy support to get the economy on a solid footing after the coronavirus.

Chinese banks are estimated to have issued 1.20 trillion yuan ($172.26 billion) in net new yuan loans last month, compared with 1.81 trillion yuan in June, according to the median estimate in a Reuters survey of 27 economists.

That would still be higher than 1.06 trillion yuan in credit a year earlier.

The central bank, the People’s Bank of China (PBOC), said on Thursday it would make its prudent monetary policy more flexible and targeted, and keep liquidity appropriately ample to support economic recovery.

Central bank adviser Ma Jun said in remarks published this week that there was no need to step up monetary policy easing as a recovery was well underway.

China dropped its annual growth target this year for the first time since 2002 and pledged more government spending to help revive the world’s second-biggest economy.

The PBOC has already rolled out a raft of easing steps since early February, including bank reserve-requirement cuts and targeted lending support for virus-hit firms.

Broad M2 money supply growth in July was seen at 11.1%, the same as growth the previous month.

Annual outstanding yuan loans were expected to grow 13.2% for July, the same as for June.

Authorities have been leaning more heavily on fiscal stimulus to weather the downturn, cutting taxes and issuing local government bonds to fund infrastructure projects.

The government is targeting a 2020 budget deficit of at least 3.6% of gross domestic product, higher than last year’s 2.8%, and fixed the quota on local-government special bond issues at 3.75 trillion yuan, up from 2.15 trillion yuan.

New local government special bond issues totalled 2.27 trillion yuan by end-July, accounting for 60.4% of the year’s quota, the finance ministry said on Tuesday.

Local governments should aim to complete the issue of special bonds by end-October.

The government finished issuing 1 trillion yuan in special treasury bonds by the end of July to help cope with the impact of the coronavirus pandemic, the finance ministry said this week.

Any acceleration in government bond issuing could help boost total social financing (TSF), a broad measure of credit and liquidity.

In July, TSF was expected to have fallen to 1.85 trillion yuan from 3.43 trillion yuan in June.